Oral Answers to Questions

DEFENCE

The Secretary of State was asked—

Defence Spending

Paul Flynn: What progress has been made in achieving an equitable sharing of the burden of defence spending among other allied European countries in the past 12 months.

Geoff Hoon: The latest available data show that the defence expenditure of European NATO allies, in aggregate, has remained broadly stable, in real terms, over the past12 months. However, most European allies are planning to make more of their forces useful and deployable for NATO's missions, to ensure that a better sharing of defence tasks is possible in future. That is why the United Kingdom has strongly supported the need to develop military capabilities through NATO and through the EU headline goal process.

Paul Flynn: Not since the battle of Omdurman has there been such a gulf between the ability of two sides to compete. We now have one superpower in the world with enormous power and superior technology. Is it sensible to put pressure on the new democracies in eastern Europe to spend more on defence in order to become full members of the European Community, when they should be spending far more on building their health services and on other useful services, such as housing and education?

Geoff Hoon: That pressure is, of course, entirely self-generated, as it applies only to those countries that want to become members of NATO. Having visited all the NATO aspirant members, that commitment is a very important part of their political profile at this stage. In those circumstances, we want them to spend more resources on defence. Equally, however, we want them to spend those resources effectively, and we want them to be able to make a successful contribution to NATO.

Paul Keetch: Whatever the outcome later this afternoon of the comprehensive spending review, I am sure that all Members will welcome any sensible rise in defence spending. Does the Secretary of State not agree that Europe already spends approximately half what the United States spends on defence, but gets nowhere near it in terms of the bangs for our bucks? The important thing is not how much one spends on defence, but what one spends it on. Will the Government therefore take a lead in ensuring that any increase in European defence expenditure is spent on the right things—along the lines of the strategic defence review that the Government initiated—and not on surplus things?

Geoff Hoon: That is precisely why the Government have strongly supported the improvement in European defence capabilities, both through the EU headline goal and through NATO's defence capabilities initiative. It is important that spending is complementary, and does not simply duplicate existing military capabilities. The Government will continue to set out our determination to see Europe improve its military capabilities so that we can participate effectively in operations led by the United States.

Kevan Jones: Is my right hon. Friend aware of the comments made by the hon. Member for North Essex (Mr. Jenkin) last week to the Royal United Services Institute. He said that the
	"EU has dreams of a role as a soft superpower".
	Does he agree that improvement of the capabilities of our European allies will strengthen both European defence and NATO?

Geoff Hoon: I agree with my hon. Friend. I carefully read the speech of the hon. Member for North Essex(Mr. Jenkin). I was slightly surprised by some of his observations, but, generally speaking, I welcomed strongly his commitment to spend more on defence—although he did not say that specifically, I assume that I can reasonably infer it from his observations about the need to ensure that the United Kingdom has effective military capabilities. I assume that, in due course, perhaps after 3.30 pm, he will be in a position to make a statement that he wants to emulate Government spending on defence over the next three-year period. I am sure that Labour Members will want to give him every opportunity to match that commitment when it comes.
	I entirely agree that one aspect of that defence spending is to ensure that it is effective. My concern about the Conservatives' defence policy is that they do not appear to commit themselves to improving European defence capabilities. Without that commitment, there is a clear risk that we will reproduce and duplicate defence capabilities that are already available to NATO and other allies.

Peter Viggers: Does the Secretary of State agree that the United States is spending approximately twice as much as the rest of the NATO allies, but that its military output is about eight times as great as that of the continental allies because of the manner of that spending? Does he therefore agree that, although pressure should be brought to bear on some of the NATO allies, who, in the phrase of Senator Warner of the United States, have been "slacking off" in their defence expenditure, an increase in specialisation is inevitable if European allies are to remain relevant?

Geoff Hoon: I will not agree with the precise statistics, but I agree with the hon. Gentleman's general argument. If he is going to exert pressure, that pressure might be put on the Opposition Front Bench, as that has been precisely the purpose of the Government's efforts in NATO and as part of the EU headline goal process. The United States is capable of spending all its defence expenditure in one single, coherent direction; we must ensure that the same coherence applies to the defence spending of European nations. That is precisely the Government's policy; sadly, it is not the policy of his party.

Service Personnel

Chris Bryant: What measures he is taking to improve support for service personnel on their return to civilian life.

David Borrow: What measures he is taking to improve support for service personnel on their return to civilian life.

Lewis Moonie: The Ministry of Defence offers a wide range of support to those experiencing the transition between service and civilian life. For those service leavers eligible to receive standard career transition services, we will introduce on 1 September 2002 a tri-service resettlement manual to align resettlement procedures, policy and structures across the three services. We are also working on replacing the current system for funding resettlement training to allow service leavers greater flexibility for such training.

Chris Bryant: Many people in Wales will be delighted that the Welsh Guards will now be based in Wales. That will make a significant difference to the resettlement programme for people who have been in the armed forces. May I urge my hon. Friend the Minister to consider extending the resettlement system to those who are compulsorily discharged so that everyone who is leaving the armed forces gets an equal chance of a job when they leave? Will he also consider the position in Wales, bearing in mind that nearly 10 per cent. of all those recruited to the Royal Air Force come from Wales, but that only one in five of the regiments that recruit in Wales will be based in Wales?

Lewis Moonie: I listened to what my hon. Friend said about Wales with great care. At present, those being compulsorily discharged are not eligible to receive standard career transition services, despite the fact that they may well make up a large percentage of those experiencing problems following their discharge. We are considering changing the current rules to allow such members of the armed forces to receive specialist advice about finding jobs and accommodation and accessing further support should the initial advice fail. A six-month trial to assess the feasibility of this initiative is under way.

David Borrow: Surveys have shown that between 20 and 25 per cent. of rough sleepers have been in the services. What is the Ministry of Defence doing to ensure that those who have difficulty coping with civilian life are looked after when they leave the services?

Lewis Moonie: In addition to working very closely with the rough sleepers unit, we have two specific projects—the spaces programme in Catterick, which is run by the Church of England, and Shelter's project in Colchester—that aim to secure accommodation for people who are compulsorily discharged from the armed forces and who are likely to experience difficulties in civilian life.

John Wilkinson: Is the Minister aware that fast-jet pilots are returning to civilian life with all too great alacrity? The challenge facing Her Majesty's Government is to offer them a career structure which will enable them to stay in the services and will match the remuneration that they receive outside. Has he any new initiatives to offer? Very few fast-jet Fleet Air Arm pilots are left, and the Royal Air Force is also all too short of them.

Lewis Moonie: We have a package that is aimed at retaining air crew. I am happy to say that it is beginning to have some effect.

Andrew Murrison: In January, the Minister said that he was going to introduce something called a veteran's identity card. I assume that it will now be a veteran's entitlement card, so what will it entitle veterans to?

Lewis Moonie: It is very dangerous to act on one's assumptions. I am sorry to tell the hon. Gentleman that we have not, at present, finalised our proposals for an identity card, which is an extremely difficult thing to introduce. He rightly identifies the fact that the card should be worth more than simply another card to keep in one's wallet.

Departmental Housing

Vincent Cable: If he will make a statement on the sale of his Department's housing.

Lewis Moonie: As the hon. Gentleman will know, most of the families quarters estate in England and Wales was sold in 1996 to a private company, Annington Homes Ltd., under a sale and leaseback agreement. Under the agreement, houses that subsequently become surplus to defence requirements are released to Annington for disposal. The identification of surplus properties for release is a matter for the Department, but the method of subsequent disposal or usage by Annington is entirely a matter for the company based on its commercial judgment.

Vincent Cable: What estimate has the Department made of the cost to the Exchequer of this privatisation? The property was sold off before the current housing boom, but is now being leased back at market rates or new houses are having to be built. In my constituency, Ministry of Defence houses are in surplus, so they are being rented by the developer at commercial rates at no benefit to the taxpayer or to the armed forces? Is that not a scandal? What are the Government doing about it?

Andrew MacKinlay: Who is responsible? Who are the guilty men?

Lewis Moonie: I hesitate to point out yet again that that was a matter for the last Government. It was not the best deal that a Government have made, as I am sure we are all aware.
	There is no action that I can take to affect the sale of houses in the constituency of the hon. Member for Twickenham (Dr. Cable). Those houses are the property of Annington Homes and our agreement with it must be obeyed. It imposes a considerable cost on our budget to maintain the leaseback arrangements, but I can see no alternative.

Robert Key: Before the Minister makes an irrevocable decision to sell off the houses owned by the Ministry of Defence at Dean Hill munitions depot, will he bear it in mind that by doing so he is destroying the heart of a rural community? Will he also have a word with Lockheed Martin, which said of the team that services our Paveway bombs at that establishment and is to be disbanded, that the work force at West Dean are quite simply the best?

Lewis Moonie: The decision to change the use of that establishment is not a matter for me, but the sale of the houses is. If houses are surplus to requirements, we have a duty to ensure that we receive the best financial deal when we sell them. However, we always take account of social need. Where possible, the houses are transferred to an appropriate agency outwith the Ministry of Defence.

Regular Army

Michael Spicer: If he will make a statement on changes in the trained strength of the regular army between 1997 and 2001.

Adam Ingram: Army strength stood at 101,199 as at31 December 1997 and 100,914 as at 31 December 2001.

Michael Spicer: Given those figures, how can the Government plan a land war in Iraq?

Adam Ingram: As we have shown time and again, when our armed forces are called on to defend the interests of this country, they do so.

James Gray: That is not an adequate response. There is widespread speculation in the papers and elsewhere that the United Kingdom's contribution to United States' action in Iraq will be one formed division of 20,000 to 25,000 soldiers. The Army is 6,000 under strength and the Government have not lived up to their SDR commitment to recruit 3,500 extras. When will the Army be fully recruited? How confident is the Minister about putting a formed division on the ground in Iraq or anywhere else?

Adam Ingram: There are two parts to that question. Our recruitment and retention measures have started to turn around the 15-year downward trend. As of June 2002, the whole Army strength stood at 101,503, which is an increase of 1,356 in the past 12 months. We are confident that we will continue to reverse the downward trend of those years. We have put many measures in place to produce a more positive return and they are beginning to pay off.

Welbeck Army College

John Mann: What his plans are for Welbeck army college; and if he will make astatement.

Lewis Moonie: Following the defence training review, the Ministry of Defence has invited tenders for a private finance initiative contract to provide facilities and to run a defence sixth form college, which will educate potential officer recruits for engineering and other branches requiring technical understanding in the three armed services, and for the Ministry of Defence civil service.
	A final decision will not be made before December 2002, but if the decision is made to go ahead with the sixth form college contract it is likely to open on the site of the former Woodhouse barracks outside Loughborough in September 2005. The current Welbeck college would then be closed and the lease of Welbeck Abbey terminated.

John Mann: Bearing in mind the fact that we have a national defence service and the shortage of such facilities in my area, will the Minister exercise caution in making decisions to move a facility from the north of England to a site further south? In particular, will he bear in mind the history of Welbeck army college and the importance to the local economy of the jobs that it creates as the 10th largest employer in my constituency?

Lewis Moonie: I have to say that, as a Scot, I would always object to moving things further south if it could be avoided. [Interruption.] Opposition Members have no sense of humour.
	The move is only about 30 miles, and I can tell my hon. Friend that the Welbeck site is an excellent one, but its owner has indicated that he would like us to terminate the lease there, so we are faced with no option but to look for a development elsewhere. Given my hon. Friend's constituency interest, I should be happy to discuss the matter with him.

Deepcut Barracks (Deaths)

Nick Hawkins: What inquiries he is making in conjunction with the police into the deaths of soldiers at Deepcut barracks in recent years; and if he will make a statement.

Adam Ingram: The deaths of Privates Geoff Gray, on17 September 2001, and James Collinson, on 23 March 2002, at Deepcut, are the subject of ongoing investigations by Surrey police, who have retained jurisdiction in each case. In addition, Surrey police announced on 5 July their intention to reinvestigate the cases of Privates Sean Benton and Cheryl James, who died at Deepcut in 1995.
	Those investigations are independent of the Ministry of Defence, although the Department, through the Army and Royal Military Police, is co-operating fully. Surrey police have been given full access to Army records, and the weapons involved in the incidents surrounding the deaths of Privates Gray and Collinson have been passed to the police for ballistic examination. Army boards of inquiry into the deaths of Privates Gray and Collinson will be held in due course, but cannot commence until the associated police investigations are complete. Boards of inquiry into the deaths of Privates Benton and James were carried out at the time and copies of the final inquiry reports were passed to the next of kin.

Nick Hawkins: I thank the Minister for that answer.I echo the tributes that have already been paid by assistant chief constable Frank Clark and chief superintendent Gerry Kirby to Army officials, who are co-operating fully with Surrey police, as I learned from the police when I was briefed by them last week. I welcome the help that I have already had from the Under–Secretary of State for Defence, the hon. Member for Kirkcaldy (Dr. Moonie), and his private office. I hope that I will be able to meet Brigadier Clive Elderton and Colonel Raydon, the Army points of contact for the police.
	As the right hon. Gentleman is aware, this is a matter of grave concern in my constituency and more widely. When the police have completed their inquiries, will the Army continue to look into any further implications that there may be for military matters?

Adam Ingram: I am grateful to the hon. Gentleman for his comments. Recognising his interest in the tragic death of his constituents, we have facilitated his access to the proceedings as much as possible. Clearly, what follows will depend on the outcome of the police inquiries into the deaths of Privates Gray and Collinson and of Privates Benton and James. If the need for any change is highlighted by the police investigations or by the subsequent Army boards of inquiry, we will respond positively, just as we responded to the inquiries in 1995 by making changes.

Mike Hancock: I am grateful for the Minister's statement. Will the Ministry of Defence set up a confidential phoneline so that members of the armed forces who served at Deepcut can contact the MOD to give information? That hotline should be advertised both to veterans who may have served at the camp and to all serving personnel who have been through it since 1995.

Adam Ingram: That is an interesting point, and I shall certainly consider it. However, given the public awareness of the matter and the existence of the ongoing police investigation, I should have thought that anyone with material information should inform the police in the first instance. Perhaps Surrey police, rather than the MOD, will want to take the hon. Gentleman's initiative on board.

Gerald Howarth: The Minister will know that we fully share the concern expressed by my hon. Friend the Member for Surrey Heath (Mr. Hawkins) and other hon. Members, including the Minister himself, about the individual tragedies and their potential effect on morale at Deepcut and elsewhere. I am sure the Minister agrees that the quicker the inquiry is carried out by Surrey police, the better, but given the importance of maintaining confidence in military investigations, will he tell the House whether he has requested a copy of the report that will be produced by Surrey police; whether he will ensure that that report is published; and whether he will undertake to make a statement to the House when that report appears?

Adam Ingram: It is for the police to decide what happens to their report. Following their report, the case goes to an Army board of inquiry; after that, if the families so request, and the offer is made to them, they can be given the full report. As I said, in 1995 some lessons were learned and new procedures were put in place, and if there are any new lessons to be learned from the recent tragic incidents, we will act quickly. As for the publication of the full report, the House should remember that it will have to deal with highly sensitive personal issues, and its publication might not be in the best interests of the family.

International Terrorism

John MacDougall: What recent discussions he has had with his US counterpart on international terrorism; and if he will make astatement.

Geoff Hoon: I have regular discussions with my United States counterpart about international terrorism, including during our meeting in London on 5 June.

John MacDougall: I thank my right hon. Friend for his response. Does he agree that the international coalition in the Balkans has been a great success and that the United States of America's intention to reduce the number of troops could influence stability in the area? The three presidents are due to meet shortly to discuss the matter. Premature withdrawal from the area should avoided as it would put at risk the stability that has been achieved. Will he assure me that there will be no threat to stability in the area?

Geoff Hoon: I am grateful to my hon. Friend for his observations, and agree with him that operations in the Balkans have been an outstanding success. However, he will be aware that NATO Defence Ministers—not only the United States—have approved a series of changes to SFOR and KFOR following the joint operational area review.
	The review advocates a regional approach to NATO's peacekeeping operations in the Balkans. Both Bosnia and Kosovo will be treated as a single theatre for military planning purposes. That is because the security situation in the Balkans has changed since the initial deployment of SFOR and KFOR. NATO's operations will be restructured accordingly to provide a smaller, lighter and more flexible force that will be better able to meet current security challenges in the region. However, in no way does that reduction in troop numbers signal any reduction in NATO's commitment to the region. Rather, the changes are a sign of the alliance's achievements to date in bringing security and stability to the Balkans. The UK, with the rest of NATO, remains absolutely committed to the security and stability of the Balkans and will continue to play its full role in achieving the international community's objectives for the region.

Julian Lewis: In his conversations with the US Secretary of Defence, has the right hon. Gentleman received information that convinces him of Iraqi involvement in support for international terrorism?

Geoff Hoon: There can be no doubt that Iraq has supported terrorism, or that Iraq has sought to undermine the stability of both its neighbours and the wider world. Equally, however, I have not seen any information directly linking Iraq to the appalling events of11 September last year.

Alice Mahon: In the light of mounting press speculation over the past few days, will the Secretary of State confirm that, under the guise of the war against terrorism, British troops are not being situated in the middle east in preparation for participation in a war against Iraq?

Geoff Hoon: May I make it clear to my hon. Friend and the House that absolutely no decisions have been taken by the British Government in relation to operations in Iraq or anywhere near Iraq in the middle east? It follows, therefore, that no decisions have been taken to deploy British forces in that region for that reason. I assure my hon. Friend and the House that any such decision would be properly reported to the House, as right hon. and hon. Members properly expect.

David Burnside: Has the Secretary of State, in his discussions with his United States counterpart, been made aware of evidence given to the Committee on International Relations—a congressional committee—that one terrorist organisation, FARC, has contributed $2 million since 1998 to the Provisional IRA in exchange for training FARC in urban terrorism? Will he co-operate with his American counterpart and the international policing and intelligence authorities so that if illegally laundered money is brought into the United Kingdom or the Republic of Ireland and filtered through to Sinn Fein-IRA, legal action is taken against those organisations?

Geoff Hoon: I am well aware of the material that has been made known in the United States. It is a matter of discussion between the United Kingdom and the United States as to how best to deal with that, but I assure the hon. Gentleman that as this obviously is a matter for other Departments and Government agencies, the UK Government, and not simply the Ministry of Defence, will certainly take appropriate and effective action to deal with the information and links that he rightly set out.

Malcolm Savidge: Will my right hon. Friend clarify whether, under United States influence, the Labour Government are abandoning the policy of the last Conservative Administration and all previous British Governments? During the Gulf war, John Major ruled out, explicitly and repeatedly in the House, the use of British nuclear weapons against Iraq, even in reply to a chemical or biological attack on our forces, on the grounds that a proportionate response could be made using conventional weapons and that Britain would never breach the nuclear non-proliferation treaty?

Geoff Hoon: May I make it clear, as I have made clear to my hon. Friend and the House on a number of occasions, that the British Government's policy in that respect has not changed? We remain committed to a range of international agreements that have been supported by successive Governments. That remains the position, but may I make it clear to him that that position has always been within the wider remit of international law? I have made it clear to him and the House that the British Government would only use nuclear weapons consistent with our obligations under international law.

Bernard Jenkin: May I return to the question asked by my hon. Friend the Member for New Forest, East (Dr. Lewis) about the assessment agreed by the United States and the United Kingdom of links between the Iraqi regime and al-Qaeda? While there may be no hard and fast evidence of a direct connection, as the Secretary of State has put it, between the Iraqi regime and the events of 11 September last year, is there an agreed assessment of links between the Iraqi regime and al-Qaeda, and what exactly is it?

Geoff Hoon: We keep an open mind about the allegations of links between Iraq and al-Qaeda. I have made it quite clear previously that there is no direct evidence to link Saddam Hussein's regime and the appalling events of 11 September, but if and when new information comes to light, we shall certainly investigate it. Let us not be in any doubt about Iraq. We cannot ignore the threat that it poses to the international community. We have always made it clear that the world would be a much better and safer place without Saddam Hussein.

Bernard Jenkin: I certainly concur with the right hon. Gentleman's final comments. It is clear that, while no decision has been made about what form of military action, if any, may be taken, the United States and the United Kingdom are making preparations for the deployment of a major force for possible combat operations. In that regard, may I invite the right hon. Gentleman to give the House some reassurance about the latest information on the performance of the SA80A2 rifle, which will obviously be vital in any contribution that we make to a military coalition?

Geoff Hoon: I emphasise not only that no decisions have been taken as to form, but that no decisions have been taken about military operations against Iraq other than those that are properly conducted to protect the people of Iraq under the no-fly zones—our air crew continue to face real danger in carrying out a humanitarian operation.
	With reference to the SA80A2, there has undoubtedly been a significant improvement in that rifle's capability as a result of the recent upgrade. Equally, as I found for myself on a very recent visit to Afghanistan, there are concerns among the Royal Marines, who face extremely difficult environmental conditions in Afghanistan, about the reliability of the rifle. That is being assessed. The week that I was in Afghanistan—the week before last—a team from the manufacturers and from the Ministry of Defence was there, specifically to put the rifle through still more exacting tests. The team has prepared a report, which the Ministry of Defence and I will examine carefully, to determine the best way forward as regards the rifle. I share the concern of the hon. Gentleman and of right hon. and hon. Members right across the House. We must ensure that our armed forces have a weapon upon which they can rely.

Bernard Jenkin: Again, I fully endorse the Secretary of State's last comments. If we are to make an effective contribution to the military coalition—if there is one—the soldiers whom we deploy must have 100 per cent. confidence in their rifle. Can the Secretary of State confirm that the exercise in Afghanistan involving a platoon of 30, firing 90 rounds each, resulted in 20 out of the 30 rifles jamming? Can he confirm that the concern is that the cleaning regime and the handling regime of the rifle may not have been correct? Will he also confirm that unless he can restore 100 per cent. confidence in the rifle, he does not rule out scrapping the SA80 and replacing it with an alternative?

Geoff Hoon: I will not go into the details of what is contained in a report that is still being analysed in the Ministry of Defence, but I assure the hon. Gentleman, as I assure the House, that those matters will be properly set out before the House in due course. I want to ensure that there is confidence in the weapon. The hon. Gentleman knows, as do other right hon. and hon. Members from their own military experience, that there is no such thing as a 100 per cent. successful rifle.
	A member of my constituency party with military experience asked me at a recent meeting whether I could confirm that both kalashnikovs and M16s routinely jam. That is the position. In certain circumstances and certain environmental conditions, any rifle will be subject to jamming. We must ensure that our armed forces have confidence in their weapon, and that that weapon is properly tested, and properly used and prepared for the missions that they have to undertake.

David Winnick: In the context of international terrorism, will my right hon. Friend take this opportunity to congratulate Pakistan's authorities on having brought to justice those responsible and found guilty of the murder of the American journalist? Does my right hon. Friend recall the video that was made by the murderers, including the end of the journalist's life, with his head being cut off? Does that not illustrate how important it is to fight and campaign on an international scale against those vile, evil, racist murderers?

Geoff Hoon: I was recently in Islamabad, where I had the privilege of meeting the Pakistani President. We discussed the wide range of co-operation undertaken between Pakistan, the United Kingdom and other members of the international coalition against terrorism. I am grateful to my hon. Friend for giving me the opportunity to pay tribute to Pakistan for the efforts that it has made to tackle terrorism. We want those efforts to continue and, along the border with Afghanistan, we want them to be redoubled.

Armed Forces (Recruitment)

Chris Grayling: How many people were recruited to the armed forces in 2001.

Adam Ingram: In the last financial year, 23,578 people were recruited to the armed forces. That equates to 95 per cent. of the overall recruitment target. Although improvement is still needed, this figure represents a significant advance over the previous year's achievement, when intake levels reached 90 per cent. of the tri-service target.

Chris Grayling: A moment ago, the Minister was praising his own recruitment and retention initiatives for the armed forces, yet despite those new entrants, the number of people in the armed forces fell again in the year up to last February. What will the hon. Gentleman do to stop this haemorrhage of experienced, trained personnel from our armed forces?

Adam Ingram: We will continue to ensure that we provide the best quality of life and conditions in the armed forces. Major improvements have been made in the past few years—a big step up on what happened when the hon. Gentleman's party was in government. We seek to give personnel the best equipment available, which is why we have a major series of procurement programmes; we value all that we ask them to do for us. Of course, we must recognise that recruitment and retention are difficult against the background of a successful economy. That is part of the issue that we are having to deal with. The Opposition may not want a successful economy, but I think that this country does.

Bill O'Brien: When considering recruitment to Her Majesty's forces, will my right hon. Friend have regard to the many people in Nepal who are anxious to serve in the Gurkha regiments? Will he explain the future of the Gurkha regiments?

Adam Ingram: The Gurkhas have given us good and loyal service for many years, and we anticipate that they will continue to do so for many years to come. We have recently rebrigaded the Gurkhas and I know that that has gone down well in the regiments. I pay fulsome tribute to all that they have done and will do in future.

David Laws: With today's spending review setting new targets for the Ministry of Defence over the next three years, will the Minister explain why the Ministry has yet to meet the manning targets that were set for it three years ago?

Adam Ingram: I think that I have explained some of the difficulties that we face. Every time Opposition Members say something negative about the armed forces—most of the negatives are based on press speculation—it can be a drag on recruitment and, indeed, retention. The language that is used must be chosen carefully. All of us must recognise that, with a successful economy, it is difficult to recruit and retain personnel in the armed forces. I hope that the hon. Gentleman will accept that that is the reality. I hope that he will also accept that, because of all the initiatives that we have taken in recent years, the downward trend of the past 15 years is now being reversed. We are working against a difficult backcloth. Some of it is based on success, but it also includes problems that happened in the past, which we are now tackling successfully.

Racism

Kevin Brennan: What measures he will take to eliminate racism in the armed forces.

Simon Hughes: What measures his Department is taking to increase the number of members of the armed forces from ethnic minorities.

Adam Ingram: The armed forces are committed to diversity in general and recruiting from ethnic minority communities in particular. All three services have established ethnic minority recruiting teams or diversity action teams and located them in areas of high ethnic minority population. The services undertake numerous initiatives aimed at encouraging ethnic minority personnel to join the armed forces. They have put in place a wide range of measures to promote equality and eliminate racism. Through strong leadership, education and training at all levels there is a determination to root out any form of unacceptable behaviour. While much has been achieved, it is recognised that there is still more to do.

Kevin Brennan: I thank my right hon. Friend for that reply. Three years ago to the day, the son of a constituent of mine was sentenced to 112 days' detention for being absent without leave from the Royal Welch Fusiliers, having been subjected to a catalogue of racist abuse in his platoon, including physical assault. This young man had been awarded an engraved tankard for being the finest of his group of recruits in the armed forces. What assurances can my right hon. Friend give me that institutionalised racism will not and is not being tolerated in today's armed forces?

Adam Ingram: I do not know about the specific instance of which my hon. Friend speaks, but I can say that there is an absolute commitment to zero tolerance of racism in the armed forces. Indeed, since 1998, more than 4,000 senior officers and equal opportunities advisers have been trained in equal opportunities by the tri-service equal opportunities training centre at Shrivenham. Equal opportunities training is also undertaken widely across all three services. We clearly have to ensure proper education throughout all ranks of the armed forces. As I said, the best assurance that I can give him is that zero tolerance is the watchword.

Simon Hughes: Ministers will be aware that although the Army has recently done very well in increasing the numbers of people it recruits from ethnic minorities, the Navy and the Air Force are still on only about 1 per cent., and officer levels in respect of those with ethnic minority backgrounds are still just over 1 per cent. What is being done to ensure that the Navy and the Air Force move quickly to achieve their targets and to ensure that officers—as well as people in the lower ranks on lower pay and with less influence—represent all communities in the United Kingdom?

Adam Ingram: I agree with the hon. Gentleman's general point, and more has to be done. The more commitment that right hon. and hon. Members bring to that through highlighting the issue and trying to encourage more people from the ethnic communities into the armed forces, the better served we will all be. That said, I point out to him that some 14 events have taken place in his constituency. We have particularly targeted not only his constituency, but London in its entirety, because of the large concentration of ethnic communities in the city and surrounding areas. I hope that we can play out to the RAF and the Navy the lessons that have been learned from the success of the Army, which has exceeded its targets. A lot of commitment is put into the matter. I hope that the hon. Gentleman can engage in the work that is done in his constituency, where we have been particularly active. I shall make sure that he is invited to some of those events.

Discharges

Roger Williams: How many soldiers under 18 were refused discharge as of right because they had completed their training in the last 12 months.

Lewis Moonie: None. Discharge as of right is exactly that—a right. No valid applications from soldiers seeking such discharge are refused, although commanding officers may seek to persuade individuals to stay if they feel that they have the potential for a good career.

Roger Williams: I thank the Minister for that reply and for the help that he has given me in dealing with a case in my constituency whereby a young soldier committed criminal offences in an attempt to leave the Army because discharge as of right was not readily available to him.
	Does the Minister agree that many young men and women join the Army with great enthusiasm, only to realise that it is not their career of choice? Would not it be better for the morale and effectiveness of the armed forces if discharge as of right was available to all young people up to the age of 18, regardless of whether they had completed their training?

Lewis Moonie: Up to the age of 18 no application is refused once it is clear that the alternative of trying to keep someone in will not succeed, although that is clearly a difficult step to take. The hon. Gentleman makes a good point. Many people adjust very badly to leaving home and joining the armed forces, but many of those who leave subsequently rejoin.

Defence Fire Service

Angus Robertson: What representations he has received in favour of privatising the defence fire service.

Adam Ingram: None.

Angus Robertson: I am certain that the Minister shares my concerns about matters of fire safety at RAF bases, especially bearing in mind last week's report by the Civil Aviation Authority into the near collision of three Tornadoes based in my constituency at RAF Lossiemouth. Given that he is unable to name one single supporter of the privatisation of the defence fire service—not even among Labour Members or from the trade union—will he reconsider what even the leader of the Conservative party described as "a privatisation too far"?

Adam Ingram: We do not need to take any lessons from the leader of the Tory party on that matter. It is interesting to note the new collusion between the interests of the independent nationalist party and the previously self-proclaimed unionist party.
	The hon. Gentleman uses terminology that I do not recognise—that is why I gave the answer that I did. We are considering the delivery of services across the whole of the air support services. Some areas already use private contractors. There is a mixed economy. The bids that are put in are subjected to in-depth analysis to ensure that we get best value for money and retain the integrity of the vital support that is required from the work force at those bases.
	I remind the hon. Gentleman that he is campaigning for part of the airfield in his constituency to be used by private commercial operators. Who does he think would give support to those commercial operators—private companies or the RAF? He has to get his argument sorted out.

Jim Knight: When considering the matter, does the Minister differentiate between fire services in support of deployed forces and those that are based permanently in the United Kingdom? I have observed fire services at the secure site at Aldermaston acting effectively. With right my hon. Friend, I have also observed the fire service that was deployed at Kabul airport operating successfully, but clearly not in the private sector. Such differentiation is important.

Adam Ingram: I assure my hon. Friend that that will form part of our overall consideration.

Teddy Taylor: Before the Government proceed with that further privatisation, will they consider carefully the alarming anxiety caused in Shoeburyness by their decision to abolish the Ministry of Defence police in September and replace them with a civilian force? Is not it irresponsible and dangerous to place civilian police, who cannot provide an armed response to protect the public, in charge of a site where a lot of ammunition is stored?

Adam Ingram: The hon. Gentleman knows that we are consulting widely. My hon. Friend the Under-Secretary, who has direct responsibility for the decision, has given all the assurances that he wants.

George Foulkes: Has not my right hon. Friend been far too nice to the hon. Member for Moray (Angus Robertson)? If he and his colleagues had their way and the Scottish people were foolish enough to vote for independence, there would be no RAF Lossiemouth.

Adam Ingram: I was enjoying that question so much that I did not want to rise. I note that the leader of the nationalist Scottish National party, the hon. Member for Banff and Buchan (Mr. Salmond), has just entered the Chamber. Perhaps he would like to intervene to explain his party's policy on NATO. Under it, Scotland would not be an aspirant country. Clearly, an independent Scotland would put at risk much of the defence footprint there, which is provided through the United Kingdom.

Royal Marine Commandos

Michael Fabricant: If he will make a statement on the future role of Royal Marine commandos in the war against terrorism.

Geoff Hoon: The Royal Marines of 45 Commando are returning from their successful deployment in Afghanistan and will be having a period of rest and recuperation. The vast majority will have returned by 19 July and the remainder, mostly logistics personnel, will return as soon as possible thereafter.
	As I told the House on 16 October last year and most recently on 20 June, this is not a conventional campaign and it will vary in pace and intensity. Any future deployment of the Royal Marine commandos will depend on the situation at the time and the specific capabilities required.

Michael Fabricant: I am relieved that 45 Commando will soon enjoy some rest and relaxation. The Secretary of State knows that 40, 42 and 45 Commandos have been operational in the past few months. What consideration will he give to a change in the order of battle to create a fourth commando, given the current circumstances and the fight against terror?

Geoff Hoon: The hon. Gentleman is right. Elements of 40 Commando remain at Bagram to provide essential support to UK forces that remain in Afghanistan. However, its next role will be to act as the lead commando group for the joint rapid reaction force. The Ministry of Defence and I are always prepared to consider proposals for augmenting the excellent work of our Royal Marines. The hon. Gentleman's suggestion may be one way forward.

Glenda Jackson: Surely a successful prosecution of the war against terrorism depends on more than the undoubted bravery of Royal Marine commandos. If the British Government support the US Government and engage in a pre-emptive strike against Iraq—an action that many of my constituents believe to be illegal and immoral—would not it shatter the international community's current response to the war against terrorism?

Geoff Hoon: I have already answered that question, not only today but at previous defence questions. To avoid doubt, I repeat that no decisions have been made about military operations against Iraq.

Russia and NATO

David Atkinson: If he will make a statement on steps he is taking to improve the relationship between Russia and NATO.

Geoff Hoon: The United Kingdom, especially my right hon. Friend the Prime Minister, has taken a leading role in the recent historic transformation of NATO's relationship with Russia. The UK will continue to work to make the new partnership a success. Indeed, the fact that I am leaving for St. Petersburg this afternoon to meet my opposite number, Sergei Ivanov, shows the importance that I personally attach to developing the relationship with Russia. We are building on the existing range of successful bilateral contacts and initiatives, including ship visits, our military resettlement programme, and our contribution to Russia's chemical weapons disposal programme.

David Atkinson: Does the Secretary of State recall that, less than three years ago, NATO was rightly condemning Russia for using disproportionate brutality in the second Chechen war? Does he agree that, for Russia's relations with NATO to become ideal, Russia must be required to hold to account those responsible for such war crimes, and to introduce a political solution that will restore peace, democracy and human rights to Chechnya?

Geoff Hoon: One of the advantages of having a mature and sophisticated relationship with Russia is that a range of issues, including the situation in Chechnya, can be properly and effectively discussed. I am sure that the hon. Gentleman, with his knowledge of Russia, will recognise that it is much better to talk to Russia about these issues than simply to have the kind of stand-off that was characteristic of the cold war.

Mike Gapes: Does my right hon. Friend know that, last week, a number of Members had the pleasure of hearing Mikhail Gorbachev speaking in Committee Room 10? Does he not agree that it is fantastic that the vision of a common European home that Gorbachev was putting forward in 1986 is at last beginning to be established through the good relations between NATO and Russia?

Geoff Hoon: I, too, had the privilege of meeting Mikhail Gorbachev, and it is certainly my view that he has never been given the credit that he deserves internationally for the efforts that he made at the time of the collapse of the Soviet Union. He is also a man who is not properly regarded in his home country, and perhaps he has had to come here to the United Kingdom to receive the recognition that he rightly deserves.

Andrew MacKinlay: Before my right hon. Friend visits St. Petersburg, will he discuss with the Foreign Secretary the problems relating to Kaliningrad? What is being proposed by the European Union is equivalent to United States citizens travelling from Alaska to Oregon, and needing to have a visa to go through Canada. Does my right hon. Friend not realise that that is quite unacceptable, grossly unfair to the Russian federation, and needs to be addressed with some urgency if we are to promote good relations with our friend, the Russian federation?

Geoff Hoon: As I said earlier, I will be going toSt. Petersburg this evening. The Foreign Secretary is somewhere in the far east—in India, I think—at the moment, so I cannot give my hon. Friend the assurance that he requires just at the moment. The Foreign Secretary and I discuss these matters, however, and I have certainly had the opportunity to discuss Kaliningrad during my visits to each of the Baltic states. I recognise that there are issues still to be resolved, not least in relation to whether the Baltic states may enjoy membership of the European Union.

Conflict Prevention

Mark Hendrick: If he will make a statement on the contribution of his Department to conflict prevention.

Adam Ingram: The Ministry of Defence contributes to the Government's interdepartmental conflict prevention strategy, in collaboration with the Foreign and Commonwealth Office and the Department for International Development. We provide military training to support the reform of the armed forces of partner countries, and to develop their capacity to take part in peace support operations. We also provide training and education, and both military and civilian expertise, to support wider security sector reform. The Ministry of Defence also contributes forces to operations in support of conflict prevention and peace-building. In the past year, these have included deployments in Sierra Leone, Macedonia and Afghanistan, as well as continuing commitments in a wide range of locations, from Bosnia and Cyprus to the Congo and Georgia.

Mark Hendrick: Given the devastation that conflict has caused the peoples of Africa, especially in Sierra Leone, is not it essential that we continue with the pooled arrangements for conflict prevention if we are to prevent a conflict in countries such as the Republic of the Congo?

Adam Ingram: My hon. Friend makes a good point. He will be aware that there has been increased recognition of the extent of the problems in sub-Saharan Africa and in other parts of Africa. Considerable effort is being made. Sierra Leone was a good example of where we contributed to the stabilisation of the country. We must be conscious of our successes, and also of any other problems close to countries that we have helped to bring back to full stability. I thank my hon. Friend for that question.

Spending Review

Gordon Brown: The long-term funding that we announce today for Britain's public services is possible because the bills of economic failure in unemployment and debt have been radically reduced; the state of our public finances is strong; and, despite uncertainties in the global economy, inflation is under control, interest rates have been low and stable, and employment and growth continue to rise.
	In this period, with global financial markets of greater instability, our task and our determination, as always, is to remain vigilant and committed to sustaining monetary and fiscal stability, with the strength to take the right long-term decisions for Britain.
	I can tell the House that, over the economic cycle, we will not only meet all our fiscal disciplines and rules, but we are on track to meet our fiscal disciplines and rules with a margin for prudence even on the most cautious case—[Interruption.]—and even on the most cautious assumptions. Indeed, it is so that we can steer a course of monetary and fiscal stability across the economic cycle that we have reduced net debt from 44 per cent. of national income in 1997 to 30.4 per cent. last year, which is in contrast to 41 per cent. in America, 53 per cent. in the euro area and almost 60 per cent. in Japan.
	As we set out in the Budget, Britain's debt has been reduced to the lowest level of national income in the G7, and the lowest of all our major European competitors. Having last year paid off more debt in one year than all previous Governments in the last 50 years, I can report that this year debt interest payments will be lower as a share of national income than they have been at any time in the last century, since the first world war.
	Twenty years ago, debt interest payments consumed 4 per cent. of our national income. Debt interest is now half that, at 2 per cent., which is a saving worth £20 billion a year. Those extra resources have made it possible to recruit more nurses, more doctors, more teachers and more police than at any time in the past two decades.
	Twenty years ago—indeed, 10 years ago—1.6 per cent. of national income was spent on the costs of unemployment. Today, I can again report that this year we will spend just 0.4 per cent.—savings worth a further £10 billion a year.
	It is through maintaining a steady hand on the public finances at all times that we are able to meet our fiscal rules and match our reforms with new resources, so that efficient, strong public services play their part in delivering a modern Britain of greater opportunity and greater security not just for some, but for everyone.
	I can report to the House that, holding strictly to the total spending envelope I set out in the Budget, we are raising departmental spending from £240 billion this year to £263 billion next year, £280 billion in 2004–05, and £301 billion in 2005–06—in total, by 2006, there will be £61 billion a year more for improved public services.
	Ten years ago, only 50p of every pound of additional expenditure—50 per cent.—went to the public services, the rest having to be spent on debt and social security, whereas in this review almost 80p in every additional pound is going directly to improving public services, and of the remaining 20p—20 per cent.—most is being spent not on debt interest and unemployment, but on improved pensioner and children's benefits.
	In each area of service delivery, from housing to education, from policing to defence, we are tying new resources to reform and results, and developing a modern way for efficient public services, which includes setting demanding national targets; monitoring performance by independent and open audit and inspection; giving front-line staff the power and flexibility to deliver; extending choice; rewarding success; and turning round failing services.
	I can also tell the House that over the next three years, as we reverse the backlog in investment, our projections from 2006—other than the commitments to health paid for by national insurance—are based on real-terms increases in spending on public services at 2½ per cent. a year.
	With this review's decisions we will not only continue to address past decades of chronic underinvestment in education, health, transport and housing, but rise to new challenges in a changed global environment—international challenges including the essential duty of fighting terrorism, and challenges here at home as global economic competition brings vastly increased opportunities but also increased insecurities. The role of Government is— by expanding educational, employment and economic opportunity, and by encouraging stronger communities—to enable and empower people to make globalisation work for their families and their future.
	First, to respond to global insecurities and the new fight against terrorism, the Secretary of State for Defence is announcing that the budget for our armed forces, who have served our country overseas with courage and distinction not only in Afghanistan but recently in Kosovo, Macedonia and Sierra Leone, will rise from £29.3 billion this year to £32.8 billion by 2005–06. That rise of £3½ billion a year is the largest sustained real-terms increase in defence spending for 20 years.
	Since the tragic events of 11 September, international co-operation and, led by the Prime Minister, Britain's international engagement have assumed a new importance, so the Foreign Office's and Foreign Secretary's budget will rise from £1.3 billion this year to £1.5 billion by 2005–06. Within that budget we will strengthen the work of the British Council, whose budget will rise from £157 million a year to £185 million by 2005–06. The budget for the BBC World Service, whose 160 million-a-week audience is now its largest ever, will be £38 million a year higher by 2005–06.
	When it comes to meeting the urgent moral challenge of combating international poverty, the question for us is how a strengthened commitment by our country can inspire a step change in aid from all the richest countries so that we can fulfil the millennium development goals: to halve world poverty, cut child mortality by two thirds and deliver primary education for every child. The Secretary of State for International Development is announcing a rise in United Kingdom aid from the £2 billion that it was in 1997 and the £3.3 billion that it was last year to £4.9 billion by 2006. That is the biggest ever rise—a 35 per cent. real-terms increase since 2001, and a 93 per cent. real-terms increase since 1997. By raising the contribution figure of 0.26 per cent. of national income that we inherited and today's 0.32 per cent. figure to 0.4 per cent. by 2006, and by untying aid and targeting aid on the poorest countries, we are ensuring that more money goes towards tackling poverty than has gone towards it at any time in the history of British aid.
	Starting with our dialogue with churches and non- governmental organisations next week and proceeding to September's Johannesburg summit—at which the Prime Minister and the Deputy Prime Minister will be present—and the International Monetary Fund and World Bank meetings later in the month, we want this new finance from our country to be an engagement and a signal for a new $50 billion international financing facility involving all rich countries: a new alliance against poverty which recognises that by meeting our moral obligations to the poorest of the world we advance opportunity and security for all the world.
	At the heart of our spending decisions this year is a set of major economic reforms that will expand our national wealth so that Britain can become more productive and prosperous, and we can make the most of the new opportunities of the global economy. Invention and innovation are the key to long-term national competitiveness, so in partnership with the Wellcome Trust—which I thank—we will create and fund a new national centre for excellence in science teaching. After a rigorous selection of priorities within the industry budget and a move away from the old loss-making subsidies of the past, I can announce a 10 per cent. real-terms annual rise in the science budget and, by 2005–06, an extra £1¼ billion a year for British science.
	Britain must not make the mistakes in science education in the next generation that we made in the last, and so to fund a new generation of young British scientists, we will implement the Roberts report—which means on average, a £4,000 rise in science post-doctoral Research Council pay, with the average stipend for Research Council PhD students rising to more than £13,000 by 2005–06. Even after inflation, that figure is twice what it was in 1997.
	We will encourage a third role for universities beyond teaching and research—the commercialisation of new discoveries. The higher education innovation fund will rise to £90 million a year by 2005–06, to ensure that more British inventions become British manufactured products, creating British jobs.
	To remove barriers to productivity growth in the north and in the south of our country, the Deputy Prime Minister will this week announce reforms to our planning system, including new business planning zones to ensure development and to create jobs in high-unemployment areas. He will also announce new funds and plans for meeting housing needs south and north—throughout the country—ensuring that we make good use of the space in our existing towns and cities, while protecting valuable countryside around them.
	Because a successful rural economy is vital both to rural areas and to our entire economy, the Secretary of State for Environment, Food and Rural Affairs is announcing today that she will implement the core recommendations of the Curry report to promote sustainable farming. To make this possible, and to improve Britain's flood defences, her budget will rise from £2.5 billion this year to £2.9 billion in 2005–06—an annual average real rise of 2.7 per cent. a year after inflation.
	To secure balanced development in every region—tackling regional weaknesses, and building on regional manufacturing and industrial strengths—we must decentralise decision making out of Whitehall. I can announce that our nine regional development agencies will now have a strengthened local role in transport, tourism and housing. To pilot further devolution from Whitehall for services to small businesses and adult skills, and to reverse decades of indifference and neglect of our regions in this country, the budgets for RDAs will rise from £1.6 billion a year to—by 2005–06—£2 billion a year, as local people make more of the decisions about meeting local needs.
	Addressing the long-term underinvestment and neglect of transport is vital both to economic prosperity and to the quality of life. To deliver the 10-year transport plan, the transport budget will rise from £7.7 billion this year to £11.6 billion in 2005–06—in total, over the next three years, a 12 per cent. real-terms increase. The Transport Secretary will also consult on the long-term need to increase airport capacity in our country.
	To secure a more competitive environment and to root out anti-competitive practices, the budget of the Office of Fair Trading will increase from £34 million this year to £55 million by 2005–06. We are determined that everything is done to ensure the highest corporate standards, and next week, in the light of Enron, the Secretary of State for Trade and Industry will put before the House the interim report on accounting and auditing reform.
	There are now 1.5 million more men and women in work than there were in 1997. Unemployment in Britain is today lower than in Japan, lower than in America, and lower than in every other major European country, and for the first time for 50 years Britain has the lowest unemployment of any major industrialised nation. However, because we will never be complacent as long as people who can work are out of work, we need further reforms that match rights and responsibilities to help people acquire more flexible skills and new jobs, so that they can succeed in the changed global economy.
	Having ensured in the last five years that 1,750,000 men and women have benefited from the new deal, the Secretary of State for Work and Pensions will roll out nationwide by 2006 the successful Jobcentre Plus one-stop service that will help young and adult unemployed, lone parents and the disabled who are seeking work to find the jobs that they need.
	Having already raised further education student numbers to 4 million and raised modern apprenticeships from 75,000 in 1997 to 220,000 today, the Secretary of State for Education and Skills will announce new money and tough targets to reform further education, improve workplace skills and expand modern apprenticeships to more than 300,000 young people in 2004. To ensure that British business has the skills it urgently needs today, the Home Secretary will expand the work permit system for key workers from 50,000 in 1997 to an expected 175,000 next year.
	While, overall, there are 60,000 more small businesses than there were in 1997, even more British people should have the opportunity to become self-employed and to start their own firm. So the corporate tax cuts in the Budget and the stamp duty exemptions for high unemployment areas are matched in this review with new help for start-up businesses by raising the Small Business Service budget and by extending and increasing the phoenix fund from £100 million to £150 million.
	To meet our long-term aim that in every area of the country every school pupil is introduced not just to the world of work but to the world of business, we will fund an expansion of enterprise education from less than 1,000 schools today to all our 3,500 secondary schools.
	One of the greatest challenges of the future is to protect and safeguard our environment through sustainable development and to advance towards the 2010 targets—20 per cent. less carbon dioxide emissions, 10 per cent. of electricity from renewable sources—the spending review will, in addition to financing the £100 million fund for the development of renewable technologies, provide in 2005–06 an additional £38 million for sustainable energy initiatives.
	Let me now turn to the public service investments this spending review makes to help those who contribute through public service to build stronger, more secure communities. We know that an enterprising economy with opportunity for all requires a fair society where there is security for all. But we also know—those of us who believe in the importance of public services—that we have a special duty to ensure that public money is spent wisely and efficiently and we are as determined to secure value for money as we are to secure money for our services.
	So, first, the Government are today publishing new public service agreements setting out agreed outcome targets and reforms for each Government Department. Secondly, with independent audit and statutory inspection, Departments and agencies will be fully accountable for performance against targets: so, in addition to the new police standards unit, we are creating the health and social care inspectorates and a reformed criminal justice inspection regime and a single housing inspectorate.
	In each service area, the review's decisions promote choice and devolve responsibility, authority and flexibility from the centre out to local and regional decision making—down to primary care trusts, which this Labour Government created, to head teachers and governors in schools, to police commanders on the front line, and to local service providers. One essential feature of this year's spending decisions is that voluntary, charitable and community organisations will also receive significantly increased funding to support their chosen role in delivering local services. Just as sustained economic growth demands responsibility in setting private sector pay, so too a sustained commitment to better public services demands responsibility in setting public sector pay.
	When a service is underfunded, or when it is underperforming, people are let down. So while public service providers who perform well will be given more resources and more authority to innovate, in this review Departments have set as a condition for more resources that failing institutions will be dealt with early and decisively. Poor-performing schools will be subject to takeover by new leadership or by a neighbouring school, or closed and reopened as a new school. Failing local education authorities will be subject to takeover by high performing authorities. Poorly performing colleges will be subject to loss of funding from learning and skills councils, with provisions for necessary college mergers. Poor-performing social services and housing departments will have new directorates and senior managers. Poor-performing local authorities will first be subject to a recovery plan to tackle bad performance and, if that is insufficient, subject to new managers or takeover of functions. Just as my right hon. Friend the Home Secretary is taking power for police reform, prisons that underperform will need to improve or face new management drafted in. However, in every case, at the same time, we will incentivise and reward success with high-performing institutions receiving new resources and greater autonomy—new freedoms and more flexibility.
	So just as in the Budget resources for health were matched by reforms in health, so too behind each decision we are making today—from housing to crime, from urban renewal to education—the Government's standard is clear: for more given in resources more is required in results. This is the vision for public services, and on that basis I can announce new investments that will improve our services and strengthen our communities.
	After long decades of persistent neglect that have left Britain's housing stock inadequate and substandard, since 1997 we have increased our investment in housing from £2.3 billion to £4.8 billion this year. And now, as the demand for new and better housing grows in a growing economy, it is time for a step change with the most sustained rise in housing investment for 25 years.
	On Thursday, my right hon. Friend the Deputy Prime Minister will make a statement to the House on his reforms: new homes for social tenants and key workers—including low-cost home ownership in London and the south-east—and plans to tackle homelessness and upgrade old properties in all regions where housing need exists. To pay for this, we will by 2005–06 invest £5.9 billion a year in housing. Since 1997, this will mean a 105 per cent. real-terms increase in the housing budget over and above what the previous Government did.
	Neighbourhood renewal is not just about bricks and mortar. It is about renewing community life, and this depends upon more economic activity, more businesses and more jobs. Having raised investment in economic and social regeneration in 88 hard-pressed neighbourhoods of our country to £300 million this year, we will increase the neighbourhood renewal fund to £525 million a year by 2005–06.
	As we sign public service agreements with our local authorities to match resources to reform, my right hon. Friend the Deputy Prime Minister will set out details on Thursday of an annual real-terms rise for local government of 4.2 per cent. a year over and above inflation—well above the average settlements until 1997.
	The mark of a decent society is the dignity that it accords to its elderly, so my right hon. Friend the Secretary of State for Work and Pensions is announcing the extra resources necessary to deliver, from October next year, the pension credit to nearly half of all pensioner households. This will be worth up to £14 extra per week for single pensioners. It is a measure for which I hope there will soon be all-party support. Following the Pickering and Sandler reports, a consultative Green Paper on pensions will be published in the autumn, and my right hon. Friend the Secretary of State for Health will announce how the extra 6 per cent. real-terms growth in social services budgets will improve community care for the elderly.
	Britain's disabled need and deserve a better deal too, so I can also announce that having created the Disability Rights Commission to oversee and enforce the rights of disabled men and women, we will raise its budget to 2006 by 14 per cent. in real terms.
	I have said to the House in the past that our children are 20 per cent. of our population but 100 per cent. of our future. So, to realise our goals of nursery education, better child care and a sure start for the very young, we are announcing today, after a major interdepartmental review, details of a new integrated budget for children for child care and early years learning. It will be worth, by 2005–06, a total of £1½ billion a year. Following the review, there will be new ministerial arrangements for child care policy.
	By October 2004, every three and four-year-old who needs it will have a nursery school place. We are also expanding the successful sure start experiment to meet the needs of up to 400,000 children. We will now increase investment in child care with funding for an additional 250,000 child care places.
	Parents have said to us that communities are far stronger and children far more secure where there is a focal point in a community for a wide range of children's services, so I can announce that we will fund the creation of children's centres across the country, providing services for an additional 300,000 children by 2005–06.
	At the heart of the next stage of children's services are voluntary and community partnerships, which are increasingly a vital link between the needs of children and the help that they receive. In each of our constituencies, there are hundreds of voluntary and community organisations. Throughout the country, hundreds of thousands of volunteers help millions of people, giving everyone in Britain, at different times in our lives, the chance to serve, and to get the balance right between what we can do for our country and what our country does for us.
	To enable the vitality and independence of the charity, community and voluntary sector to grow and flourish, the Chief Secretary is announcing details of a new three-year fund of £125 million for voluntary organisations to draw on for their public service work. I can also confirm that the budget for the children's fund—helping volunteers and charities that assist vulnerable children—will be £200 million a year to 2006. There will be an additional £25 million over three years to support the growth of local parental support, and we are also extending the £20 million support to community amateur sports clubs, not just for one year, as we have announced previously, but for each year to 2006.
	Since museums were opened free to the public, attendances have risen by 75 per cent. The Secretary of State is announcing a budget increase for culture, media and sport—including additional funds for tourism—and the budget will rise from £1.3 billion in total this year to £1.6 billion by 2005–06. With this increase, Britain will maintain free access to national museums, invest in regional museums, and expand local creative arts partnerships. To open up sport to all, not only will there be additional support for sports clubs but funds for much-needed investment in school sports facilities and new finance for extra sports coaching in the years up to 2006, in time for the next World cup. Similar allocations are necessary in Scotland, Wales and Northern Ireland.
	Stronger communities must be safer communities, where rights are matched by responsibilities. We are therefore committed to getting more police out on the streets and to making crime fighting more effective. With his new reforms in place, the Home Secretary will announce details of the rise in the Home Office budget from £10.7 billion this year to £13.5 billion by 2005–06—an increase of nearly £2.9 billion a year by 2005–06 to ensure that, in addition to police numbers rising next year to 130,000, reforms to speed up the asylum system can be made, internal security will be strengthened, and the criminal justice system can tackle both crime and the causes of crime. The long-term vision for the criminal justice system—how we match policies for opportunity with policies for security—will be set out by the Home Secretary when he publishes the criminal justice White Paper.
	Ministers in the devolved Administrations will make separate announcements outlining their plans to allocate the additional £4.1 billion a year set aside by 2005–06 for all devolved functions in Scotland, the £2.3 billion a year more by 2005–06 for Wales, including continued funding to 2006 of objective 1, and the £1.2 billion a year more by 2005–06 for Northern Ireland, including funding of the European peace initiative.
	Finally, I turn to education. What happens in our schools in this decade will shape our society and our economy for much of this century. We cannot equip children for the 21st century in classrooms built in the 19th century. Capital investment to modernise our schools, which was raised from £680 million in 1997 to £2¼ billion last year, will therefore be raised again—to £4½ billion a year by 2005–06. That represents a 400 per cent. real terms increase since 1997, backing up our additional 20,000 teachers in the classrooms.
	The increased funds for investment, improved access and excellence in further and higher education—including our universities, and building on the 100,000 extra students since 1997—and the reforms essential to meet our targets will be announced by the Secretary of State for Education and Skills, but we can achieve our goals for further and higher education only if we persuade more young people to stay on at school. Thirty years ago, the school-leaving age was raised to 16, but Britain cannot reach its full potential as long as nearly a quarter of 16 to 19-year-olds are not in education or training, and Britain, for decades, has suffered the worst drop-out rate from school of any industrialised country.
	The Secretary of State for Education and Skills has set out her reforms to the curriculum for 14 to 19-year-olds. We must ensure now that no one is prevented, through lack of income, from staying on for the qualifications that they undoubtedly need.
	Already in a third of England, income-related education maintenance allowances have substantially raised staying-on rates at school. So I can announce that, from September 2004, we will extend this successful experiment to all the country, with education maintenance allowances worth up to £1,500 a year for those who stay on and study. We will fund this major advance in educational opportunity from savings that we have made from our success in reducing unemployment and debt.
	Demanding the highest standards is the modern route to realising opportunity. Those of us seeking improvements in education are determined that the numbers in the education budget are matched by the reforms necessary to secure better results in schools all across the country. As we said in detail in our 1997 manifesto, resources and reform are equally important—one cannot be achieved without the other.
	Having helped teachers and children achieve a step change in standards in our primary schools—today, we have 75 per cent. of children achieving the expected literacy standards at the age of 11 compared with just 57 per cent. five years ago—the Secretary of State for Education and Skills will tomorrow announce reforms to raise standards, enhance choice and diversity and to tackle poor pupil behaviour in our secondary schools so that schools can develop the talents of all. We will back these reforms with new resources.
	In the 2000 Budget, the Government introduced a single payment direct to schools starting at £15,000 that year for primary schools. I can announce that to help deliver schools reforms, the details of which will be set out by the Secretary of State for Education and Skills, the typical primary school will receive £50,000 next April—£10,000 higher than this year—and will receive £50,000 each April for each of the next years to 2005–06.
	Head teachers of the typical secondary school, who this April received a payment of £115,000, will receive next April a payment of £165,000. That is £50,000 more and it will rise to £180,000 in the next April and for each of the following years to 2006. Over three years, for the typical secondary school, a total of £500,000 in direct payments will be paid to every head teacher to be used for each school's priorities.
	We must also back the good leadership that is raising achievement levels in the most challenging areas and we must help schools that are behind to catch up, as we set minimum targets for improved standards at 14 and 16. So, for 1,400 secondary schools, we will match demanding new performance targets with an extra annual payment of an additional £125,000 direct to each school and head teacher.
	For these 1,400 schools, combining the leadership incentive grant and the direct payments that I have already announced means that the budget for head teachers will rise to £300,000 a year. Over three years, that is almost £1 million to allow our schools to replace weak leadership, to attract the best teachers and to improve their facilities.
	For this Government, reform and resources go together, and we know that to demand reform when one would deny resources is a betrayal of our children. So I can announce the total new resources for education. Compared to growth of less than 2 per cent. a year in the 18 years to 1997, there will be a real-terms rise for education in England, even after inflation, of 6 per cent. a year for each of the next three years. That is the biggest sustained rise in education spending in a generation. The education budget for England, which was £29 billion in 1997 and is £45 billion this year, will rise year on year over the next three years to £49 billion, then £53 billion and then £58 billion: education, education, education. By 2005–06, this means £15 billion more a year for UK education; £13 billion more in England. Spending per pupil, which was just £2,700 a year in 1997 and £3,500, last year, will rise to £4,900 per pupil by 2005–06 which, after inflation, is 50 per cent. more per pupil than in 1997.
	I challenge anyone in this House to claim that public services are their priority and then to say that £4,900 per pupil is too much to invest in our children and our country's future. We have presented a Budget for the health service and a spending review for education: as we promised, schools and hospitals first. I commend this statement to the House.

Michael Howard: I draw attention to my entry in the Register of Members' Interests and thank the Chancellor for advance sight of his statement.
	I am delighted that relations between the Chancellor and the Prime Minister have improved so much since the pre-Budget report. So cordial have they become that they cancelled all their engagements at the end of last week to spend more time together. Indeed, they have not spent so much time with each other since the last time the Government were in turmoil. [Interruption.]

Mr. Speaker: Order. Let the shadow Chancellor speak.

Michael Howard: Britain's schools, hospitals and other public services can and must be improved, but to do that we need real reform. Is not it the lesson of the past five years that more money without real reform will not work? We read yesterday that the Chancellor himself had "been disturbed" by the Government's record on failing to deliver, and who could fail to sympathise with him? After all, he provided an increase of 23 per cent. in funding for education, but last year the proportion of children meeting numeracy standards actually fell; he spent 26 per cent. more on law and order, but crime is rising again, with street crime soaring by 31 per cent.; and he allocated almost 30 per cent. more to the NHS, but waiting lists are going up again.
	How frustrating that must all be for the Chancellor. He even set in place a whole panoply of public service agreements, targets and monitoring arrangements so that all the extra money would deliver improvements in services. But what happened? The Government failed to meet their own targets: they failed on health care; they failed on violent crime; they failed on truancy; and our public services have been getting worse. The only mystery in all this is why the Chancellor does not realise that coming back to the House today and making exactly the same promises that he has made year after year, based on exactly the same approach, will lead to exactly the same results. Why has the Chancellor not learned the lessons of his past failures? After six Budgets, five years in office, three spending reviews and countless promises, is not it abundantly clear that the Chancellor and his colleagues simply do not know how to bring about real reform and the improvements in public services that we all want to see?
	The Chancellor makes great promises about our public services. He says that the
	"biggest ever investment in health and education"
	will allow
	"us to build modern public services to renew Britain",
	but that is what he said in 1998. He says that the money will
	"improve our schools, our health service and our transport system and make our streets safer",
	but that is what he said two years ago.
	Of course, he also promises change and modernisation in our public services. In fact, he promised reform no fewer than 21 times in his statement, but that was his statement four years ago. He has promised reform every year since. So where is the reform? Where is the modernisation? Where is the change?
	Why did the Government last year send schools 17 pages of documents for every working day? Is that reform? How can teachers be expected to cope with that? Why does the Home Secretary now want police officers to fill in forms in duplicate every time they stop—stop, not search—someone in the street? Is that the kind of reform that the Chancellor had in mind? Why has productivity in the NHS fallen? Why are there now more bureaucrats than beds? Is that the reform that patients want?
	Yet the Chancellor is at it again. Another year, another spending review. The same old promises, the same old failure, year after year. Does not he just deliver higher taxes? Has not he recently announced his rate tax increase? Then he preens himself and boasts about reducing public debt. One does not have to be a genius to reduce public debt if one taxes every man, woman and child in this country an extra £40 a week and imposes a £100 billion hit on pension funds. Is not it becoming clearer and clearer that money alone is not the answer?
	What is the result of the Chancellor's failure? When public services fail, is not it those on the lowest incomes who get hit the hardest? Is not it those in the inner city who cannot escape from the failing school, the hard-pressed hospital or the crime-ridden estate? The Chancellor likes to talk about fairness, but what is fair? [Interruption.]

Mr. Speaker: Order. Hon. Members are far too noisy. It is unfair to the shadow Chancellor; he should be given a hearing.

Michael Howard: What is fair about making promises to the most vulnerable sections of society and breaking them year after year? The Chancellor is at it again. Another year, another spending review. The same old promises, the same old failure.
	May I ask the Chancellor about the assumptions underlying his plans, which he barely mentioned? Has he read the recent warnings of the newly appointed economic adviser to the Department of Trade and Industry, who said:
	"The Government may be about to embark on too much spending which it will not be able to finance . . . The expectation is that taxes quite soon may have to go up again"?
	In light of those comments, does he stand by the growth forecasts outlined in the Budget and the economy's performance since then? Indeed, what confidence can we have in any of his figures when he so casually cooks the books on borrowing and debt, as he has done, Enron-style, in the case of Network Rail?
	The Chancellor has today barely mentioned something that he normally says a great deal about—productivity. Perhaps that is not altogether surprising as the latest figures show a fall in productivity in the first quarter of the year. Indeed, under five years of Labour government, Britain's productivity has grown less than half as fast as it did under the last five years of Conservative government.
	On Britain's productivity gap with the United States, the Chancellor's own advisers now say, in typical new Labour phrasing, that recent years may have seen "increased room for catch-up". Does not that phrase just sum up new Labour? Will not that be the Government's epitaph? On health, on education, on transport and on law and order, are not they masters at producing increased room for catch-up? Are not they masters at promising the earth, at trying to spin their way out of failure and at substituting subterfuge for substance? Here the Chancellor is again. Another year, another spending review. The same old promises, the same old failure.
	Of course there are some aspects of today's announcement that we welcome. We will support measures to defeat terrorism and the associated rises in spending on defence, and we welcome the increase in the budget for international development. We shall carefully study a number of the other proposals that the Chancellor announced, but there are some aspects of his statement about which we have specific concerns.
	The Chancellor indicated how he intends to pay for the new education maintenance allowances. Will he confirm that he will retain child benefit in full for 16 to 18-year-olds? He makes promises about housing. Will he confirm that the amount of affordable housing has fallen under the Labour Government, and that the total number of houses being built in this country is the lowest in peacetime since 1924? Why did he not mention in his statement his latest proposal to redistribute council grants to favoured areas that the Labour party controls, eventually leaving the south-east of England with a £200 million shortfall?
	Will not the new panoply of prescriptive controls that the Chancellor has announced today lead to the greatest increase in centralised bureaucracy for a generation? In providing better public services, there is a better way. That means learning the best lessons from other countries where there are no waiting lists, where crime is falling and where school standards are way above ours. It means moving decision making closer to the people, the families and the communities affected. It means trusting people to know what is best for their area—trusting the teachers, the police officers and the doctors to get on with their jobs without constant interference and meddling from Whitehall.
	We will not endorse the Chancellor's failed approach to public services. We will not support the policy of money without change—but before the Chancellor launches another of his scare campaigns, let me point out that that does not mean that we are against spending more on education and other services. However, we are against his plans to spend more without real reform. As his record shows, that simply does not work.
	When the Chancellor replies to questions and statements from the Opposition, he likes to start—he always does—by saying that he will answer all our points in full; then, he does not answer any of them. In his response today, let him answer only this one question. Why does he think that he can get away, year after year, with making the same old promises and proposing the same old failed answers? Why does he refuse to accept that if we are to give this country the services we deserve, it is time for real reform?

Gordon Brown: The shadow Chancellor says that he supports the increased funding for action against terrorism and for international development, but by his silence he has not supported the increased funding for education, health, housing, transport, the Home Office, policing and all the major public services in this country. When the Leader of the Opposition said on radio today that there would be not a penny more for public services, what he meant was that all talk of general reform is designed to obscure a policy of cutting public spending.
	I defy Opposition Members to go back to their constituencies this weekend and explain why they do not support the additional payments for primary schools, the £165,000 for secondary schools, and the 6 per cent. real-terms increase in education spending. Let them explain why they do not support our health service reforms and our money, and why they are considering charges for visits to hospitals and GPs. After all the talk of concern about public services and poverty, a speech, a visit to a council estate and a night in a homeless shelter, what has happened is that compassionate conservatism has given way to the usual uncaring conservatism that everyone associates with the Conservative party.
	The Conservatives will not match us on health and education, despite the fact that at the last election they said that throughout the following Parliament they would support our plans on health and education. Every Opposition Member must explain to their constituents why, having said in their manifesto at the last election they said that they would support our education and health plans, they are not doing so.
	The shadow Chancellor raised the issue of the economy and what is happening to it. We stand comparison with his record as Employment Secretary. It is not simply the fact that interest rates at the moment are 4 per cent, but went up to 15 per cent. when he was Employment Secretary. It is not simply that inflation is 2 per cent, but when he was Employment Secretary he reported it at 10 per cent. If one is dealing with the ups and downs of the economic cycle, would one prefer to do so under a Government who have cut debt and debt interest payments to the lowest level for many years, as against a Government who were responsible, when he was in the Cabinet, for £50 billion of borrowing and a doubling of the national debt?
	The shadow Chancellor said that we have come back to report that there is a need for more reform. Exactly—there is need for more reform, but the reforms that we have made—

Iain Duncan Smith: Five years of promises.

Gordon Brown: Is the Leader of the Opposition saying that we have not improved numeracy results for 11-year-olds? Is he saying that we have not met our literacy targets? Instead of 500,000 people in school classes of more than 30, there is none today. Is he saying that that is not an achievement? Is he opposing the fact that there are 20,000 more teachers in schools and 100,000 more students at university and that we are reforming secondary, further and higher education? In five years, we have made more reforms than the Conservatives made in their 18 years.
	As for economic reform, we made the Bank of England independent, which the Conservatives opposed. We created the Financial Services Authority; they opposed it. We created an independent Competition Commission; they opposed it. We created the new deal of rights and responsibilities; they continue to oppose it. We will therefore not take any lectures about the conduct of economic policy from the Opposition.
	On planning reforms, the Deputy Prime Minister will announce on Thursday—Opposition Members will, and should, welcome this—reforms to the planning system that will speed up planning and put more resources into making the planning system more effective. It is a tragedy that nothing was done during 18 years of Conservative government. As for housing, we are doubling the housing budget, having already doubled it. The housing reforms that we are making, which will be announced on Thursday, should be welcomed by Opposition Members as well Government Members.
	Waiting lists, which the shadow Chancellor also raised, are down by 100,000 on 1997. There is no point in his trying to lecture us on the national health service—he would cut the NHS budget. He said that all of us in positions of responsibility should be judged on our performance. He, remember, had ministerial responsibility for financial services at the start of the pensions mis-selling. He was Minister for Local Government when the poll tax was introduced. He was Employment Secretary when unemployment went up by 1 million, and was Home Secretary when crime doubled.

Paul Goodman: Answer the question.

Gordon Brown: The question is whether the Conservatives can ever stand before the country again as a serious party if they are not prepared to finance education, health and decent public services. May I tell the shadow Chancellor that at the last election, to win his seat in Folkestone, he said that the Conservatives would spend more on education and health. He cannot face his electors with a policy of cuts in education and health. He should go back to the drawing board and think again.

Matthew Taylor: Watching the Conservatives today is like watching the charge of the Light Brigade. Unlike them, we welcome the spending increase for hospitals and schools. We believe that the British people will do the same, and the polls suggest that even Conservative supporters will.
	After two years of cuts and five years of phoney figures, no longer the same old failures: at last Labour is admitting the truth. Public services were failing because they were starved of funds, but why then did the Chancellor cut income tax just two years ago? Why did he allow the share of national income going to education to fall in the last Parliament as a whole? Why did Labour not tell the truth about its tax plans at the general election? No wonder people do not trust Labour.
	Conservatives voted against the tax rise; today they oppose the spending rises, so now we know for sure: Conservatives want fewer teachers, fewer doctors, fewer nurses. No wonder the British people do not—

Mr. Speaker: Order. The hon. Gentleman is putting questions to the Chancellor of the Exchequer, not to the Conservatives.

Matthew Taylor: On our side, the money is welcome. We had the courage to argue for it at the election. The question now is whether the Chancellor is spending it well, and there the signs are bad. There is not more reform but more control. Why is there more control from the centre, more red tape and more control freakery? What is the Chancellor afraid of? Why will he not trust local people with local school and hospital decisions, and trust communities with their hospitals and schools?
	Here we have it—quangos for health, quangos for social services, quangos for police. The Chancellor may be able to control his Cabinet colleagues, but he cannot control every classroom and he cannot run every hospital ward. It is time to trust the teachers with their classes, the doctors with their patients and the nurses in their wards. The Chancellor has given them the money, and now he should give them the freedom to do their job, answerable to the patients and the community, not tied up in red tape and quangos answerable only to the Chancellor.

Gordon Brown: I am surprised at the Liberal shadow Chancellor saying those things. First, we are devolving power to primary care trusts. We are devolving power to schools. We have just announced the biggest payments direct to head teachers. Equally, we are devolving power to both regions and localities in terms of housing, social services and so on. I should have thought that he would welcome the inspectorates that we have set up to ensure that there is proper public information about how various organisations are meeting the standards expected of them.
	Once again, while I welcome the fact that the hon. Gentleman supports the additional public spending, the Liberal party wants us to spend more—[Interruption.] Last week, the Leader of the Liberal party was standing in the House of Commons demanding that more money be spent on community care. The week before, more money was requested for other purposes. In comparison with what the Liberals promised at the last election, by 2006 we will be spending £9 billion more than they promised on education, £25 billion more than they promised on health, £6 billion more than they promised on transport, and £1 billion more than they promised on international development.

John McFall: May I commend the Chancellor for a huge boost to public services? In particular, I single out the education maintenance allowances, to which the shadow Chancellor referred and which will increase the incentives for young people in disadvantaged areas to stay on in education after 16. Can the Chancellor assure me that there will be no black holes down which the money will go, and that the reforms are essential for the benefit of the economy as a whole? Does he agree that those who govern or wish to govern must be clear, transparent and honest about the money that they will spend and where that money will come from?

Gordon Brown: I am grateful to the Chairman of the Treasury Committee. I think that what he says is very important. I am rather surprised that the shadow Chancellor and shadow Chief Secretary have chosen to abandon the House of Commons at this very point, when it is not only our proposals that are under scrutiny, but theirs as far as public spending is concerned.
	On the point made by my hon. Friend, yes, we will extend education maintenance allowances. I believe that there should be widespread support in all parts of the House for more people being able to stay on at school and for there being no financial barrier to their doing so. The condition of the education maintenance allowances—this relates to his point about value for money—is that this is not money given in return for nothing; it is given in return for young people staying on at school, studying for qualifications and making a go of it in their final years at school so that they can get college and university qualifications. I look forward to visiting the Treasury Committee to talk about this and other matters.

Kenneth Clarke: I congratulate the Chancellor on his ability to use the word "prudence" at least once without an apparent blush of shame or regret, as he used to cite her more frequently. Will he confirm my understanding on two points: first, that this is the biggest rate of increase in public spending that has been announced since the early 1970s, or for 30 years, since pre-International Monetary Fund intervention days; and, secondly, that it is being announced at a time when the outlook for the real economy—indeed, the global economy—and its ability to create wealth and grow is probably more uncertain than it has been for a very long time?
	Does the Chancellor justify that with his constant citing of the levels of national debt and the present levels of deficit, which I am sure he realises are the result of an American-led western boom that led to his under-forecasting revenues and finding that he was over-forecasting spending? Does he not agree that in three years' time, where he should be looking in prudence, debt will be higher, deficits will be growing and interest rates will probably not be as low as 4 per cent.? If we have had a period of low growth or worse, he will face tax increases or unhealthy public deficits, or both, and a difficult time for the real economy. This review is a gamble; it is spend, spend, spend. That is popular today—it always is and always was when it happened in the past—but those of us with a concern for the national interest must have our fingers crossed that at least some of it comes off.

Gordon Brown: That is exactly what the former shadow Chancellor and Chancellor said when we talked about the 2000 spending review—that it was unsustainable, that we would not be able to finance it, that it would cause inflation and that we would not be able to meet our commitments.

Kenneth Clarke: I said that the Government would have to put up taxes.

Gordon Brown: The right hon. Gentleman said that it would be inflationary and unsustainable, and that has not been the case at all.
	As far as taxation is concerned, we put it to the country a few months ago that, after the Wanless report, it was necessary if we were to finance proper health service spending up to 2008 and to make that new decision, that we had the national insurance rise in place. If the former Chancellor, who believes in the national health service, unlike so many of his colleagues on the Conservative Benches, looked at the figures, he would support what we are doing in relation to the NHS.
	The problem about the former Chancellor's position is that he wants to return to the old annual Budgets of the 1990s and the annual spending rounds in which spending was set in November, but then had to be changed during the year as a result of all sorts of different events. We are taking a far more long-term approach, and the reason why we can do so is that we have reduced national debt to a realistic level. If debt were at 44 per cent., the level left by the former Chancellor when we came into power, we could not do what we are doing today, but debt is down to 30 per cent., not least because we used the proceeds of the spectrum sale to pay off large amounts of national debt. I may say to him that if Opposition Members complain that we have not been fast enough in delivering all the improvements in public services that we want, it is precisely because we had to deal with the record of the Conservative Government under whom debt was at 44 per cent. and the borrowing requirement was nearly £30 billion. Inflation was rising when we came in and interest rates had to be put up.

Several hon. Members rose: —

Mr. Deputy Speaker: Order. However important the statement is, questions to the Chancellor cannot go on indefinitely. To get in as many as possible, I call on hon. Members to make their questions single and brief, and for equally crisp answers.

Tam Dalyell: What contingency plans have been made for an attack on Iraq and rocketing oil prices?

Gordon Brown: My hon. Friend is Father of the House and makes his points in his usual way. As regards the defence budget, we make very cautious assumptions at all times about what is likely to happen to oil prices.

Peter Tapsell: Implicit in the Chancellor's statement was the decision to follow Germany, France and Italy in breaching the rules of the European growth and stability pact. Did he note last week's stern warnings from the president of the Bundesbank and the International Monetary Fund that these across-the-board increases in Government expenditure without the prospect of matching growth will bring the viability of the euro into serious question? Will he take that risk into account when he examines his five vague economic tests?

Gordon Brown: Trust the hon. Gentleman to make the public spending announcements on education, health, transport and public services generally into a question about Europe. On the stability and growth pact, he is well aware of our views about the fiscal rules that we believe are appropriate to a modern economy and the debate that is being held in Europe about that. It is interesting that at the last election, the hon. Gentleman's manifesto said:
	"Waiting times to see a consultant have lengthened. Secondary classes are larger. There is a growing shortage of teachers."
	Surely he must support additional investment in health and education, as did his party at the last election, and should not he be telling his Front Benchers that the policy of opposing our investments in health and education is a road to electoral suicide?

Anne Campbell: I thank the Chancellor for his statement and warmly welcome his assertion that housing and transport are particularly important parts of the infrastructure, especially in areas where there is a vibrant and healthy growing economy, as in Cambridge. Does he think it feasible for local authorities to set a target of 50 per cent. affordable housing in any new housing development, because that is what we desperately need in areas such as mine?

Gordon Brown: I am grateful to my hon. Friend. The interest that she has taken in science over many years has been a powerful influence on the Government's determination to get more resources into the science budget. On housing, she will know that I said that a statement was to be made by the Deputy Prime Minister on Thursday. He is committed to more affordable housing, especially in areas of great housing demand, of which my hon. Friend's is one. She will have to be patient and wait until he makes his statement on Thursday.

Nicholas Soames: Does the Chancellor accept that although many Conservative Members and others welcome the increases in overseas aid and science, and some of those in education and health, my right hon. and learned Friend the Shadow Chancellor was right to say that the increases are not only unsustainable, but positively incontinent? Will the Chancellor tell the House precisely what have been the gains in productivity, especially emanating from the health service, since his last announcement of this type?

Gordon Brown: I have to tell the hon. Gentleman that when he looks at the health service, he will see that waiting times are coming down. When he looks at in-patient and out-patient waiting lists, he will see that they are down on what they were in 1997. When he looks at the building of new hospitals, they are proceeding apace. When he looks at the recruitment of nurses and doctors, he will see that we are getting them into the key specialties. When he looks at the accident and emergency units in our hospitals, he will see that we have repaired and renovated 95 per cent. of them over the past few years. I agree with him about one thing—more investment is needed, in education as well as in health. I am grateful that he has distanced himself from the position of his Front Benchers, which is to oppose investment in health and education.

Bill O'Brien: I congratulate my right hon. Friend on his statement, which is designed to improve the quality of life of everyone in this country. On behalf of local government, may I ask him about the modernisation of housing? Will local authorities have some input into that modernisation programme? Will he consider carefully the authorities in the special interest group of municipal authorities—SIGOMA—where underachievement owing to poverty and deprivation is a major problem and crime hotspots need to be tackled.
	Will my right hon. Friend consider giving funding to the hospice movement to ensure that there is no closure of hospice beds?

Gordon Brown: I will pass on to the Secretary of State for Health my hon. Friend's concern about support for the hospice movement. He rightly points to the neglect of housing over many years and the need for neighbourhood renewal as well as an attack on crime. We are a third of the way towards fulfilling our targets for decent housing. However, as my hon. Friend knows, considerably more remains to be done, and that is why we have provided the extra funding.
	On improving the neighbourhoods in the areas that he described and their concerns about local government funding, we announced increases in the budget of the neighbourhood renewal fund. My hon. Friend also mentioned crime. The Home Secretary will make a statement on the criminal justice White Paper, and I believe that he will be able to show the extra resources that are going towards fighting crime.
	My hon. Friend represents the interests of his constituency with great determination, and he pointed to some of the increases in investment, housing and policing that the White Paper includes.

David Trimble: The Chancellor announced an increase of £1.2 billion in three years' time in Northern Ireland. Although we naturally welcome that, I understand that it includes several adjustments, some of which are technical, and the right hon. Gentleman will appreciate that we shall therefore suspend judgment on the detail until we have had an opportunity to study it.
	The Chancellor knows that we inherited a pattern of expenditure in Northern Ireland that meant significant underinvestment in public utilities. We need and welcome his continued support for our efforts to achieve change and reform.
	At the beginning of his speech, the Chancellor said that he hoped to provide for more doctors, nurses and police officers. He referred to funding for the Northern Ireland Office and said that the Government were providing resources for the ongoing recruitment programme of policemen and the establishment of a new training college. We are more than 500 officers short in the full-time establishment, and the number is dropping. Yet there is a serious problem of maintaining law and order and security in Northern Ireland. Will the resources that have been provided fully fund the additional officers that we need to reach the modest establishment targets that Patten set? Will the extra resources fully fund the new police training college?

Gordon Brown: I am grateful to the First Minister for his questions. We discussed some of those matters when we met last week, and I was delighted to visit Northern Ireland a few weeks ago when we launched the economic initiative. I applaud the right hon. Gentleman and his Ministers for all their efforts to achieve economic growth and modernisation in Northern Ireland. The settlement is based on the Barnett formula, and he knows that it is worked out carefully to fulfil the needs of Northern Ireland, Scotland and Wales. There is extra funding for the European peace initiative in Northern Ireland. I shall raise the right hon. Gentleman's questions about the Northern Ireland Office with the Secretary of State for Northern Ireland, and we shall be in touch with him.

Mike Hall: My right hon. Friend's statement will be enthusiastically welcomed in my constituency, which is the home of Daresbury laboratory, a world-leading scientific research facility. Will he consider the centre for accelerated science imaging project as soon as possible? Daresbury laboratory is designed to secure its future. Will he give it his backing?

Gordon Brown: My hon. Friend always makes a persuasive case for his constituency. He knows that such decisions are not for the Treasury but for others. However, my hon. Friend rightly said that the science budget had been increased. It will greatly help the north-west region that he represents so well, and other regions of the country. The 10 per cent. increase in the science budget and the extra £1¼ billion by 2005–06 in partnership with Wellcome Trust, which is contributing an extra £250 million, means that we can start to build for the next generation in science. What I have seen in the north-west offers great hope for the future. Science in the region will expand as a result of the measures.

Geoffrey Clifton-Brown: The Chancellor plagiarised a phrase that I used at Prime Minister's questions three weeks ago when he said that the mark of a civilised society was the way in which we treat our elderly. Why has he sanctioned a mechanism whereby taxation can be transferred from the south to the north? Why should an elderly person in Cheltenham have his funds transferred to someone in Cleveland? Why should parents in Gloucester have their funds transferred to a school in Gateshead? Surely everyone who pays taxes deserves equal treatment. Will the Chancellor ensure such equal treatment?

Gordon Brown: We are one United Kingdom, and I should have thought that the hon. Gentleman would welcome what we are doing for the elderly. We are raising the basic pension, and the winter allowance—which the Conservatives opposed—free television licences for the over-75s, and the new pension credit are among the other measures that we have taken to help today's pensioners. The hon. Gentleman should be in favour of what we are doing, and, so far as community care is concerned—I suspect that that is part of the issue that he is raising—the 6 per cent. increase in real terms of the social services budget in this three years' budgeting is far more than any Conservative Government ever did.

Caroline Flint: I certainly welcome the reforms of the national child care strategy proposed in my right hon. Friend's statement, and I hope to explore that matter further in my Adjournment debate on Wednesday. On the education maintenance allowance, which Doncaster has piloted, does he recognise and accept that this is not just about investment in 16 to 19-year-olds? By providing the allowance, we can help those who are socially excluded from university education to gain the qualifications necessary to apply. Will my right hon. Friend ensure that we not only monitor take-up at 16 but examine whether there is an effect on the numbers who then apply to university after staying on at school after 16?

Gordon Brown: I am grateful to my hon. Friend and I wish her well in her debate on child care. I hope that the figures we have announced for the additional investment in child care will be matched by the creation of child care businesses, and by more local authorities and other organisations getting involved in the business of providing child care. I also hope that the money available will be quickly converted into the child care places and the carers that we need.
	Education maintenance allowances are an innovation that has worked in the third of the country in which they have been piloted. The staying-on rate at school has increased from 5 per cent. to 8 per cent. This has been proven to be a worthwhile experiment, and any barrier to staying on at school that can be removed is worth removing. What my hon. Friend says about further and higher education and the applicability of this measure is obviously something that she will persuade Education Ministers to look at.

Nick Gibb: Will the Chancellor tell us by how much debt interest will rise over the next five years, first in cash terms, and, secondly, in real terms? Will those figures include an estimate for interest on the increasing amount of off-balance-sheet debt that the Chancellor is accumulating?

Gordon Brown: On the hon. Gentleman's point about off-balance-sheet debt, we have done what no other country has done—[Interruption.] Conservative Members should be congratulating those who were Ministers in the previous Conservative Government, because we have consistently published—

Eric Forth: Cooking the books.

Gordon Brown: Well, if the right hon. Gentleman wants to accuse the previous Government, whose practices we have followed, of cooking the books, it shows how out of touch with that Government he was—as we thought. So far as contingent liabilities are concerned, we publish all the details on that matter and we have had discussions about it in the Select Committee on the Treasury. [Interruption.] It is all very well for the Conservatives to shout about contingent liabilities, but we are following the practices that have been pursued by previous Governments, and have done so over the last few years. The table on contingent liabilities is regularly published. So far as debt interest is concerned, it is a share of gross domestic product and will remain at around 2 per cent. over the next few years.

Tony Wright: On any test, this is a make-or-break statement for public services. If we do not begin to see world-class public services as a result of this kind of spending announcement, we are never going to see them. Much therefore hangs on what my right hon. Friend has said today. Will he say a little more about what he rightly described as the need to ensure that, when people see the money going in, they can connect it to the results coming out? That is the only way that we are going to get sustained support for this strategy. There is a difficulty if people cannot see the improvements in a measurable and demonstrable form, or if there is no independent evaluation of them.

Gordon Brown: I am grateful to my hon. Friend, who has always taken an interest in the workings of government and in how we can improve them. In our first term, it was obviously crucial that we ensured that there was a proper framework for economic stability, and that we got people back to work and increased employment. The money that is now flowing into public services has been made possible by achieving that. The question is, how do we get best value for money? I insist that we need the independent and statutory inspection that my hon. Friend has described, so that people can see for themselves—through proper accountability—whether services are delivering.
	Equally, in dealing with failing institutions, it is incumbent on us, as people who believe in the public services, to take early and pre-emptive action when organisations, institutions and services are not delivering as they should for the people. That is why I have read out to the House a number of measures proposed by individual Departments for dealing with failing institutions. I look forward to further discussions in the House about how all these reforms—the public service agreement targets, the devolution of responsibility, the independent audit and inspection, the proper rewards for success and the penalties for failure when institutions do not serve the public—can be pushed through. I should have thought that, instead of laughing at those reforms, the Conservatives would welcome them.

George Osborne: May I ask the Chancellor the question put by my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb), which he failed to answer? How much, in cash terms, will debt interest payments rise in the next five years?

Gordon Brown: It is estimated that debt interest payments in 2005–06 will be £22.8 billion. In rough terms, that is half what they would be if we had the debt levels that we had under the Conservative party 10 or 20 years ago.

Margaret Moran: I warmly thank my right hon. Friend for listening to those of us who were calling for increased investment in housing, especially given the atrocious legacy of housing need that we inherited from the previous Tory Government. By 1997, there was a £19 billion disrepair backlog, 2 million were in negative equity, homelessness had doubled and local authority housing investment had halved. Is my right hon. Friend aware that, in areas such as mine, there is no space for further new building of social housing? Would he consider ways in which we can ensure that local authorities bring back into use private long-term empty property? In Luton, there are seven private empty properties for every homeless family. That would be a productive way of tackling the housing need that was left by the previous Tory Government.

Gordon Brown: I am grateful to my hon. Friend. Since I first met her, she has been anxious to put forward the case for proper housing policies. Representing that city, she has been active in pursuing the case for better housing. The suggestion that she has made is a matter for the Office of the Deputy Prime Minister, who is considering innovative ideas to tackle the shortage of houses in some parts of the country and the substandard housing in others. My hon. Friend should put her suggestions to him. There will be a statement to the House on this matter on Thursday.

Alex Salmond: Now that the Chancellor has abandoned double and treble counting, he has announced increases of 6 per cent. a year for English education and 7 per cent. for English health. Does he accept that the knock-on effect in Scotland and Wales will be increases in those vital budgets of little more than half those amounts? Will he tell us definitively whether he intends to accede to the demands of the Deputy Prime Minister and the other anti-Scottish forces in the Cabinet and on the Back Benches and scrap, review or revise the Barnett formula, or does he think that the restrictions on the rate of increase will do the job for him?

Gordon Brown: I am surprised that the hon. Gentleman is arguing for more public spending when his party has been going round the country telling us not to raise the oil taxation that is necessary to fund increased public spending. I would think more of the former leader of the Scottish National party if he matched the spending that he is demanding with an ability to support the necessary revenues. As for support for education in Scotland, the outstanding fact that he should never forget when he tries to throw percentages at us is that spending per head in Scotland is higher than spending per head in England.

Harry Cohen: Does the Chancellor acknowledge that, for public services to improve, public service workers' pay needs to improve? Some of them do a top job, but are very low paid. Will the Chancellor say what is in this settlement to enable fairer pay for public service workers?

Gordon Brown: Public service pay is a matter for local government management in negotiation with local government workers. My hon. Friend knows that a real-terms rise is proposed in the salary negotiations that have been taking place. When the issue of low pay is raised, everyone should remember that what we have done with the tax credit system since 1997 is to help low-paid workers—whether it be through the working families tax credit or now through the employment tax credit that is being introduced. Many low-paid workers are being told by their unions that they are worse off, but some of them are £50 a week better off.

David Cameron: The Chancellor is announcing how he will spend future tax revenues, which are wholly dependent on the performance and growth of the economy. Can he confirm that he still forecasts that the British economy will grow by more than 3 per cent. next year? Given the pause in growth that we have had this year, is he happy with that? The executives at Worldcom and Enron overstated their revenues. Is the Chancellor guilty of the same crime?

Gordon Brown: I am surprised that the hon. Gentleman, of all Conservative Members, should indulge in such short-termism: as he knows, and as happened when he was advising a Conservative Government, we publish forecasts twice a year. We have published our forecast in the Budget, and we will publish our forecast in November in the pre-Budget report.
	The hon. Gentleman should also know—I find that the Conservatives are not willing to be up to date at all on this—that the fiscal rules we have set are set over a cycle, and will be met over the cycle. That means that borrowing for necessary investment can take place, but it also means that we must have a current balance. As I have said, there is a margin for prudence in the figures that I announced in the Budget, and we are uprating from today.
	The hon. Gentleman—this Conservative Member—should be congratulating us on the fact that unemployment in his constituency is now 0.7 per cent. He should also remember, when he asks about public spending and whether we can afford it, that in his election commitments he said:
	"The UK spends just 5.8 per cent. of our national income on health care, compared to 9.8 per cent. in France. We need more public investment".

James Purnell: I welcome my right hon. Friend's announcements on housing. Will they cover areas with substandard housing such as Hattersley in my constituency?
	Does my right hon. Friend agree that a mantra of reform without investment is just code for cuts, and shows that the Conservatives are the party of spin and we are the party of delivery today?

Gordon Brown: The fact that the Conservatives talk of reform in general, while the shadow Chancellor gave no details of any single reform during the 20 minutes for which he spoke today, surely proves to anyone who is prepared to listen that talk about reform is simply camouflage for the real Conservative policy of public spending cuts. Back Benchers must be thinking twice about what the shadow Chancellor says. The Conservatives promised higher spending on health and education at the last election and said that they would match our plans during the Parliament. Now Conservative Members are being told by the shadow Chancellor and their leader that the policy of the Conservative party is cuts in health and cuts in education.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. I have time-restricted business to protect. I remind the House that there will be a debate on public expenditure next Tuesday.

Moorside Mining

Harry Barnes: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 24, to debate an important matter that requires specific and urgent consideration, namely,
	the ending of underground working at Moorside Mining, Eckington, Derbyshire, owing to the refusal of brokers to renew statutory required insurance cover for small mines and that of the Department of Trade and Industry to provide a covering bond.
	After receiving welcome state aid under the European Union programme, Moorside seemed set for a bright future. It is a reliable producer, providing high-quality coal, and has full order books. Owing to the ending of insurance cover, however, since this morning the underground work force of 27 have not been allowed to enter the mine for their normal shifts. The mine is now in a condition in which it could be flooded and destroyed.
	To operate a mine it is necessary to meet statutory requirements, including the holding of employers' liability insurance. The limited number of brokers who have been willing to supply such cover pushed up payments considerably. Moorside's coverage, which has just run out, cost 350 per cent. more recently than it did a year ago. Moorside's insurers now refuse to renew the coverage at all. It has so far proved impossible to obtain alternative cover even with the help of the DTI.
	One problem is that insurers fear that emphysema and vibration white finger claims will need to be met—claims from miners who, during their working lives, worked at Moorside only for short periods. That is an exaggerated fear.
	We need to discuss the options available for Moorside's survival. They include the issuing of a DTI bond, and the DTI's facilitating an alternative solution involving, for instance, the Association of British Insurers. A sensible way forward would be a self-insured scheme similar to that of UK Coal: all mines would pay a reasonable fee, with Government cover, while the moneys in the scheme grew. The comprehensive spending review, which we have just heard, needs to find Government funding to handle such insurance problems. The problem that I have raised is beginning to affect other small mines and other businesses. Betwys colliery, in south Wales, is experiencing similar difficulties.
	I hope that you, Mr. Deputy Speaker, will agree to the Adjournment of business to allow us to discuss the ways and means of saving the last coal mine in Derbyshire—

Mr. Deputy Speaker: Order. In the end, the hon. Gentleman's speech was well-timed, and I am sorry to interrupt him on his last word. I have listened carefully to what he said, and I must give my decision without stating any reasons. I am afraid that I do not consider the matter that he raises appropriate for discussion under Standing Order No. 24, so I cannot submit his application to the House.

BILL PRESENTED

Firearms Amendment (No. 2)

Mr. David Wilshire presented a Bill to make provision for the regulation of the purchase of air weapons. And the same was read the First time; and ordered to be read a Second time on Friday 19 July, and to be printed. [Bill 179]

STANDING COMMITTEE ON REGIONAL AFFAIRS

Motion made, and Question put forthwith, pursuant to Standing Order No. 117(6) (Standing Committee on Regional Affairs),
	"That—
	(1) the matter of the White Paper 'Your Region, Your Choice: Revitalising the English Regions' (Cm 5511, May 2002), being a matter relating to regional affairs in England, be referred to the Standing Committee on Regional Affairs;
	(2) the Committee meet at Five o'clock on Wednesday 17th July at Westminster to consider the matter referred to it under paragraph (1) above; and
	(3) the proceedings at the meeting be brought to a conclusion at half-past Seven o'clock."—[Derek Twigg.]
	Question agreed to.

EDUCATION BILL (PROGRAMME) (No. 4)

Motion made, and Question put forthwith, pursuant to Order [28 June 2001],
	"That the following provisions shall apply to the Education Bill for the purpose of supplementing the Orders of 4th December 2001, 23rd January 2002 and 6th February 2002:

Consideration of Lords Amendments

1. proceedings on Consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion at Ten o'clock on the day on which those proceedings are commenced or, if that day is a Thursday, at Seven o'clock on that day.
	2. The Lords Amendments shall be considered in the following order, namely, Nos. 12, 13, 14, 23, 27, 37, 1 to 11, 15 to 22, 24 to 26, 28 to 36 and 38 to 98.

Subsequent stages

3. Proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—[Derek Twigg.]
	Question agreed to.

Education Bill

Lords amendments considered.

Clause 10
	 — 
	Powers of governing bodies to form or invest in companies to provide services etc.

Lords amendment: No. 12.

David Miliband: I beg to move, That this House disagrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this we will consider Government amendments (a) and (aa) to the words so restored to the Bill, Lords amendment No. 13 and the Government motion to disagree thereto, and Government amendments (a) to (c) to the words so restored to the Bill.

David Miliband: We believe that the new freedom for schools proposed in these clauses will be valuable in helping them to work together to raise standards. Labour Members stand for enterprise in, and by, schools. We want new partnerships between schools, and we want best practice to lead the rest—whether in relation to pedagogy, to the curriculum, or to information and communications technology. I am glad to say that in our endeavours, we have welcome support across the House for the measures that we are debating. As a member of the Education Bill Standing Committee, I sat in rapt attention, and was particularly struck by one impassioned speech. The Member in question said, in respect of these specific clauses, that
	"we may be on the verge of providing for an extremely exciting new environment that provides scope for new ideas for the benefit of education."—[Official Report, Standing Committee G, 18 December 2001; c. 191.]
	I could not have put it better myself. The Committee member in question was the hon. Member for Altrincham and Sale, West (Mr. Brady), whom I am glad to quote in this regard. He was clearly taking his cue from a distinguished predecessor of his, Lord Baker of Dorking, who said in a House of Lords debate:
	"I welcome these clauses in the Bill."—[Official Report, House of Lords, 7 May 2002; Vol. 1874, c. 1055.]
	Given my strong memory of the hon. Gentleman's impassioned speech, I was more than a little surprised to discover that the Opposition joined in the process of deleting the clauses in the other place.

Graham Brady: Perhaps I can help to jog the Minister's memory. I am sure that he cannot recall his predecessor's giving any satisfactory reassurance in respect of the concerns that we raised in Committee about where liability would fall if such companies were set up. As he will learn, it is perfectly normal practice in this House that, if we are not given adequate reassurance, we seek to amend the Bill later on.

David Miliband: I am grateful for the benefit of the hon. Gentleman's years of experience in this House, which are greater than mine. All I remember from our proceedings in Committee is the eloquence of my hon. Friend the Member for East Ham (Mr. Timms), who was leading for the Government. He rebutted all manner of allegations and put a consistent and coherent view. I wonder whether there is a split on this issue, and whether this is a case of old Conservatives versus new Conservatives—or mods versus trads. I understand that the hon. Member for Stone (Mr. Cash) will lead for the Conservatives on this issue. I can give him my categorical assurance that the European Union has no involvement in this measure, so I hope that he will join me in seeking to reverse the House of Lords' view.
	There is a serious point. The Bill is about supporting schools in finding new ways to innovate and work together, so that they can raise standards. The power we are debating is a new freedom for schools. It will not be used by every school, but it will enable those schools that choose to use it to develop new partnerships, to share good practice and to support other schools.
	We are widening the choices that schools already have. It is already possible under the law for a single school to form a company, if that is necessary for the conduct of the school. This power will enable schools to work together to form joint companies, or companies that will support other schools. I find it hard to see why that form of collaborative and innovative activity to benefit the wider community of schools should be opposed.

Phil Willis: I am grateful to the Minister for giving way while he is reading his notes. We want to be helpful this evening, but could he give us examples of how the new powers will be used? What sort of companies will be formed? What will their activities be? Why is it not possible under existing legislation for schools or local authorities to do that work, because they have been doing so ever since 1944?

David Miliband: I know that the hon. Gentleman is always keen to be helpful. I assure him that this is the best that I can do in terms of a speech and I am not reading someone else's notes. I shall come to some examples of how this will be a beneficial measure in terms of pedagogy and curricula. If he feels that I have not addressed his concerns sufficiently, I hope that he will interrupt me again.
	We have always been clear that the formation of a company is not an end in itself. It is valuable only as a means to an end. Forming a company is the simplest mechanism available for groups of schools to have joint legal identity. If a group of schools want to purchase their supplies together and so benefit from economies of scale, it will help them greatly if they can do so as a single legal entity. Because a company provides limited liability status, these clauses will also mean that schools can reduce the financial risk of collaborating. That will leave them free to take advantage of the opportunities offered to them. [Interruption.] I hope that the hon. Member for Harrogate and Knaresborough (Mr. Willis) is not missing the key point that I am making. In relation to both purchase and provision of services, the opportunity to establish a company will stretch the possibilities for schools to share best practice beyond the current boundaries.
	Through increased delegation of budgets by local education authorities, schools have the freedom and confidence to buy the services they need from those best placed to deliver them. If private sector providers can sell services to schools, I see no reason to prevent schools themselves, which may have some of the most expert people available, from providing services as well. The services offered by a school company may represent an opportunity for other schools to buy in real practical experience and expertise. A service delivery company may share a particular school improvement expertise, perhaps helping a weak school to become stronger, thereby giving pupils the quality of education that is their right.
	We must make the best use of the talent and experience that is to be found in schools. The opportunities could be very wide; I shall give a couple of specific examples for the hon. Gentleman and other hon. Members. A group of schools that has developed a software package or an anti-bullying training pack may join another partner to ease production and distribution of the service. The expertise of the different partners will help to give schools access to high-quality services from which they would otherwise be unable to benefit.
	I am clear that the provisions will provide a worthwhile opportunity for schools. I emphasise that it will be an opportunity: there will be no compulsion on schools to enter into companies. Nor will there be any compulsion on other schools to purchase from companies. However, this will be an opportunity to lead the way.
	In seeking to restore to the Bill the clauses removed by the other place, we are proposing some small changes that I should explain for the benefit of hon. Members. Two of the amendments will place in the Bill detail that was to be contained in regulations. The first is the requirement that school companies will be required to register under the Companies Acts as companies limited by shares or by guarantee. We may wish to consider that in more detail, given the amendment tabled by the hon. Member for Harrogate and Knaresborough. The second is that only those specified in regulations may join companies. Placing those details in the Bill will offer greater clarity and more visible protection to companies. The other two Government amendments tighten up the requirement for companies to operate only in accordance with the requirements set out in regulations.
	We also wish to restore clause 11, which sets out the regulatory regime that we propose to introduce for service delivery and purchasing companies. It will create a necessary framework of safeguards for school companies to operate in. We are preparing regulations that we intend to be flexible and to avoid unnecessary constraint on the operational freedom of school companies. The regulations will include requirements about company operation and membership, and will create supervising authorities to oversee the school companies. The clause will also require governing bodies of maintained schools wishing to form or join companies established under clause 11 to obtain the consent of the LEA. As the House knows, we will consult relevant organisations in the education service on the draft regulations, taking careful note of the responses.
	I hope that I have addressed some of the concerns felt by Opposition Members and that the House will join me in rejecting the Lords amendments and agreeing to the Government's substitutes.

William Cash: We have heard an extremely truncated version of what the Government propose. The Minister will be well aware that these matters received extensive consideration in the other place, in Committee, on Report and on Third Reading. I am sure that he did not mean any disrespect, but the manner in which he shot through the Government's explanation left me surprised, as I think it did other hon. Members. It appeared that he was not prepared to go into the serious issues that are involved.
	The Minister may wonder why it is that the shadow Attorney-General would rise to deal with these matters. The reason is simple. There are a number of issues that relate to the interaction between company law and education legislation. Precisely for that reason, I have made criticisms of the Minister. He did not even attempt to deal with any of the issues, although he knows perfectly well what they are. When the Lords finished their consideration of the Bill, the relevant issues were left for further consideration. That is precisely why the Lords, by a substantial majority, proposed that clauses 10 and 11 should be deleted. That proposal allows amendments Nos. 12 and 13 to be considered in this place.
	We have heard a great deal from the Chancellor of the Exchequer this afternoon about prospective increases in education spending. There was much about freedom and control this morning from the Chief Secretary to the Treasury on "Today". We have been told that there will be no blank cheque. These are important matters because education has been given a certain priority by the Government, at any rate in the initial stages since the Labour party won the general election before last. The debate on school companies raises these issues. Specifically, they are at the heart of the system that the Government have adopted to implement their policy, especially in terms of education. This raises the question of companies limited by guarantee, although at the last minute in the other place the Government added arrangements for companies limited by shares, which the Liberal Democrats in their wisdom—we wait to hear what they have to say—seek to eliminate.
	Questions arise that are not confined to education. They arise also in terms of health, not to mention Network Rail. These are matters that relate to the philosophy behind which the Government are hiding on public expenditure.
	Similar serious questions and problems arise in many instances, and the debate gives us the opportunity to examine them in the context of education. Let us leave aside the spinning and weaving and examine the mechanics, the legislation and administration, the delivery and practice, the impact on schools, teachers, governing bodies, and local education authorities—and above all what it is all meant to be about, which is the education of our children.
	We heard from the Prime Minister only a few years ago that the Government's watchwords were "education, education, education." What do we have? We have administration, administration, administration along with uncertainty, uncertainty, uncertainty. And under the proposed arrangements, we have litigation, litigation, litigation.
	There was a protracted debate in the other place on the issue of school companies. I pay tribute to Baroness Blatch and also to Baroness Sharp, of the Liberal Democrats. Similarly, I pay tribute to other noble Lords across the board and to my hon. Friends who considered the Bill in its early stages both in Committee and on Report. I congratulate them on their tenacity and perspicacity in this difficult and opaque area of company law and education. The noble Lord McIntosh cannot be accused entirely of not seeking to alleviate their concerns, but we continue to have them. We do not believe that those concerns have been allayed, whether in the other place or by the absurdly short representations that the Minister has just given in respect of these matters.
	The issues with which we are now concerned arise out of Lords amendments Nos. 12 and 13, which seek to reintroduce what were clauses 11 and 12 of the Lords Bill, which were defeated on Third Reading in the other place, with some amendments, by the combined vote of Conservatives, Liberal Democrats and others. I will set out the main features involved in those clauses and deal with our objections.
	First I shall raise a question, which, as far as I am aware, has not yet been dealt with in the Bill. It arises from the potential interaction of the implementation of these provisions within part 1, which is entitled, "Provision for new legal frameworks", and which also includes clause 2, which confers power to suspend statutory requirements. The interaction between those provisions is very important.
	Clause 2 is very general, especially in its potential implications for the provisions with which we are dealing today. It provides that, on the application of one or more qualifying bodies—which are defined as including, among others, a local education authority, as well as a governing body of a qualifying school, which, in turn, is defined as including a community, foundation or voluntary school, a community or foundation special school, or a maintained nursery school—the Secretary of State can make an order exempting those bodies from any requirement imposed by the Education Acts, the Learning and Skills Act 2000 or any of the subordinate legislation. That will surprise hon. Members, as it is a very big shift.
	Indeed, the clause provides that the Secretary of State can relax such requirements, enabling the applicant to exercise educational powers and duties or make modifications to education legislation. That is a very important and draconian measure. I raise that in connection with the clauses that the Government intend to reintroduce to the Bill simply because it relates to the question of ultimate liability were a school's company to fail, whether it is a company limited by guarantee or, in line with the Minister's amendments—which are disputed by the Liberal Democrats—a company limited by shares. In either case, there is only a minuscule, nominal amount of liability.
	In a parliamentary answer given by Lord McIntosh on 25 March 2002, which was also given by Baroness Ashton, to which a letter to my noble Friend Baroness Blatch referred, it was stated that the ultimate liability would fall on the local education authority. In such a case, the local education authority will pick up the tab—that is the expression that is being put around. Will the Minister today reaffirm unequivocally whether that is so? If, by order, the Secretary of State has exempted a local education authority or a school of the kind mentioned above from its statutory functions, surely, the opportunity for the enforcement of those duties by judicial review could be taken away by such an order? That would have grave implications were a school's company to go bust, for the creditors and a whole chain of others affected, who would have no recourse in the last resort—on the face of it—to the Government and the Exchequer.
	One of the few comments that the Minister made with regard to the Bill and these amendments when he opened the debate was that financial risk to the companies would be reduced. Surely he understands, however, that, although financial risk to the companies concerned is a matter for consideration, there is also financial risk to all the other people in the chain. I shall come to those others shortly.
	The matter is also important given the Chancellor of the Exchequer's announcement about the sums of money that will be made available to education. Does the potential removal, under such orders, of the duties—we do not know what they are, because they are so vague—and hence the liabilities of local authorities and governing bodies create the possibility of a legal void? Would the liabilities be off balance sheet? It would be interesting to learn whether the Minister has anything to say about that. Will he address the question of school companies—whether they are limited by guarantee or by shares—as the provision for them was made only on Third Reading, in the dying moments of the Bill's consideration in the House of Lords?
	Insurance is another issue that was not dealt with greatly, if at all, in the House of Lords. We all know that the compensation culture, as it so described, is growing. Some claims are entirely justified, but the sums of money involved are growing exponentially. For example, the case of Pamela Phelps is important for local education authorities. In 2000, this former pupil successfully sued the London borough of Hillingdon for more than £44,000 after it was proved that her teachers had failed to diagnose her dyslexia, leaving her with the reading age of a seven-year-old.
	I could give many examples and I have no doubt that the Minister's advisers would be able to provide even more. A teacher, Carol Ellen Harper, is suing my county council of Staffordshire in the High Court for more than £50,000 after she slipped on food debris and broke her ankle. In Waltham Forest, the head teacher of the Norlington school for boys said:
	"Every day of the week, I am dealing with solicitors. This is taking a substantial amount of time which I and my teachers should be spending doing our jobs."
	His school has faced six legal challenges in the past 18 months after legal firms operating on a no-win, no-fee basis targeted parents on surrounding estates, tempting them—so it is said—with the prospect of large compensation payments. Judith Waugh, the head of the John F. Kennedy lower school in Stratford, east London, won £119,000 in High Court damages after she was attacked by a 14-year-old boy in 1998.
	There has been a flood of legal actions from pupils, who claim that schools have failed to protect them from bullies. Indeed, a High Court judge ruled that a school had to pay substantial compensation for not protecting a 17-year-old pupil from his own irresponsible behaviour on a school trip. We all know that serious problems can arise from the manner in which schools and education establishments are affected by serious accidents, such as those that have taken place on school outings recently.
	The problem of teachers' liability has been discussed by Veronica Cowan, among others. A glance at The Times Educational Supplement, which is bulging with thousands of hard-to-fill teaching vacancies, gives a clue as to how difficult it will be for the Prime Minister to deliver on his promise of "education, education, education". Indeed, teachers could be forgiven for thinking that the more likely scenario will be litigation, litigation, litigation. It would be invidious of me to go through all the examples that I could give, but I will be more than happy to supply them to the Minister in case he has not come across them already.
	Newcastle-under-Lyme abuts my constituency and many of my constituents go to school there. In a rugby game in 1997, a boy was lifted into the air and landed on his head. He decided to sue the boy who tackled him, and he was covered by the school's insurance. We are not, therefore, being difficult for the sake of it. I am not using graphic examples to raise questions that are irrelevant to the way in which schools are run. The point is this: we are interested in knowing whether regulations on schools companies will require adequate insurance provision to cover the enormous costs that could arise if a company fails.
	There is also the related problem of the responsibility of directors. The Minister probably knows that a Government consultation paper outlines proposals to change the criminal law as it relates to the responsibilities of directors. Although I will not go into that in detail, I want to highlight the fact that the Government seem willing to introduce a proposed new offence of corporate killing, which is broadly equivalent to gross carelessness. Pupils are sometimes involved in desperately tragic accidents on school outings. Will the directors of schools companies be advised in advance, in the practice guidelines, that they could be caught up in serious criminal accusations and convictions if things go wrong?
	The emphasis—the rationale of the offence—will be based largely on management failures. Although the offence of corporate killing would apply only to corporate bodies, it is important to take account of the fact that it may affect school companies. The consultation paper and the Law Commission's paper refer to the Health and Safety at Work, etc. Act 1974 and to new offences that are committed if people give undertakings. They say that that offence could apply to all employing organisations, including schools, hospital trusts, partnerships and unincorporated charities. Again, the Government need to give that careful consideration, because we need answers.
	What will happen if a company goes bust? That is an important practical matter for those concerned—children, parents, teachers, governing bodies, local education authorities, creditors and local communities. The idea of greater local freedom to manage has its attractions, but has the legislation been properly thought through? We all remember the total failure in some schools and the arrangements for LEAs and/or the Government to step in. We demand to know what will happen under the new arrangements.
	In law, if a company goes bust, perhaps because of overtrading or a massive insurance claim, the assets have to be sold. Staff have to be laid off, redundancy has to be paid and the debts must be paid off. If there is no money, insolvency will apply, under which the liquidators' remuneration and expenses take first call even before redundancy payments. Creditors, such as builders, those who provided furniture and other contractors, come way down the line. It will not just be the bankers who are involved; many small businesses will also be affected.
	We are told that if a company is limited by guarantee or shares with only, say, a £10 liability, then that is all that will be available. We are also told, however, that the LEA will pick up the tab. How will the liability be enforced? How will the LEA be expected to pay up? If the regulations are implemented, an act which could remove the duties imposed by the Government, what effect would that have? In other words, is there a legal void? If not, will the Minister give us chapter and verse to reassure us that there is none, as I am sure he will want to?
	The Government tell us that, under regulations, the company will be prohibited from admitting to its membership any person who is not of a prescribed description, and that regulations may impose requirements for the company's constitution and any other matter connected with its affairs. What exactly will that involve? That is not a theoretical but a practical question. The Minister knows perfectly well that all these matters were considered in the House of Lords and no satisfactory answer was given.
	I have a letter dated 28 May from Lord McIntosh to Baroness Blatch, which baldly states:
	"LEAs would ultimately be liable for the debts of purchasing companies, just as they are for those accrued by purchasing by individual schools."
	What will happen if an order is made under clause 2 with the effect that I have just described?
	The key question is whether the proposals will work. Lord McIntosh said that one reason
	"for using such companies is that schools may want to join together to deliver services to other schools in which they have real strength. That could result in benefits to company members and to other schools, which could receive good quality support."
	He then made a brief point about distance learning and publishing skills, before going on to say:
	"They may therefore need to bring in outside organisations . . . perhaps a not-for-profit organisation . . . as members of the company on the basis that they will take a share of the profits. And why not?"
	Lord McIntosh also said:
	"I cannot reconcile the opposition to that idea with what I understand to be the ethos of the Conservative party."
	He could not understand why we would not want commercial freedom for the companies in question. The point to which I return is that if there is merit in the principle of giving further freedom, the key question—this is where the Labour party and the Government always fall down—is not whether the Government have bagged one of our ideas and are stealing our clothes to make it look as though they are giving schools freedom to manage, but whether the policy will work. We do not yet know the detail of the regulations. There are no magic wands to be waved in such matters. My questions concern matters that will have to be dealt with on the ground.
	There is a further point. We are indeed in favour of innovation, but the amendments tabled in the other House would have allowed even more freedom, and there is a problem with that. It looks to us as though the issues have not been properly thought through, and there have been no proper answers about culpability, liability and the protection of governors. In the other place, Baroness Blatch asked:
	"How on earth will the extra time, money and effort be spent without any impact on the primary duty of a governing body, which is to manage its school?"—[Official Report, House of Lords, 3 July 2002; Vol. 637, c. 252-3.]
	Conservatives and Liberal Democrats in the House of Lords made specific points about that.
	The key question here is whether the burden imposed on the companies by the proposals would interfere with the management of the schools. There is no doubt, as the Minister in the House of Lords admitted, that a considerable amount of time and effort would be spent in setting up arrangements of this kind. This would be a recipe for imposing administrative burdens on schools.
	In a letter to Baroness Blatch, Lord McIntosh wrote, in respect of profits that may be made by such companies:
	"We do not propose that profit must be spent solely in the interests of education."
	That raises an interesting question. Schools are, by definition, charities. They are almost entirely governed by the law relating to charities interacting with the state education system. Ultimately, they are run in the context of charitable purposes. It would be difficult to imagine that profits made from those schools should not be returned to the schools themselves.
	There was some discussion of that question in the other place, but no explanation sufficient to warrant the arrangements now proposed was given. It seems clear to me that the clauses should be left out of the Bill, because there has been no clear indication of what will happen either under the regulations or in the circumstances that I have described.

Stephen O'Brien: In the context of distribution of profits, my hon. Friend touches on the relationship with the charitable purposes of education. Does he know whether the Government have considered the point raised in Committee relating to the model of co-operatives, which are run for the benefit of members, especially where schools come together for common purposes? No answer—satisfactory or otherwise—to that question has been given. It strikes me that, of all Members of Parliament, it is Labour Members—especially those who stand to represent the Co-operative movement—who should have considered and answered that question.

William Cash: Indeed, and as one of my forebears invented the Co-operative movement, I have a special interest in the answer. I hope that the Minister will now answer that question, which did not receive an answer either in the other place or in Committee of the House of Commons.
	Another important question remains outstanding. It was taken seriously by the Minister in the other place, but has not yet been addressed by the Minister handling the Bill here today. It relates to the question of whether or not undesirable characters could become involved in schools, which they might regard as easy targets for involvement in commercial activities. Baroness Blatch gave an example of someone who was indeed undesirable, saying that,
	"Had the school been unwise enough to engage in any kind of commercial activity with that person, it would have ended in tears".
	Extraordinarily, Lord McIntosh's reply to the noble Lady's question,
	"How can a set of regulations specify such undesirable or unsuitable people for the purposes of becoming a member of a company?",
	was:
	"There are two lines of protection . . . First, there is the good sense of the schools concerned."
	I hope that hon. Members take some satisfaction from that. The noble Lord continued:
	"We are talking about people from more than one school"—
	as if that had any relevance—
	"so such a person could not be the friend of one of the governors or a friend of the head teacher of one of the schools unless the other schools involved in the company were convinced of the integrity of that friend."
	Do hon. Members really regard that as a convincing answer to the question of how to keep out undesirable characters—that people will have to go chasing around, asking all the different schools whether they like this chap or that one? The very notion that that is the solution to the problem is utterly unconvincing.
	Lord McIntosh went on:
	"However, we have the protection that more than one school will be involved and there will be an independent eye cast over any invitation to join."
	On the question of leaving to regulations the matter of people who would be regarded as acceptable members of a company, he added:
	"Clearly, that will improve with experience."
	We have to discover that undesirable people have, in fact, been running those schools or helping to run them before we learn that from experience.
	Even more astonishingly, Lord McIntosh went on to say:
	"We can state in regulations that the person who becomes a member of a company shall have educational objectives"—
	that is basically the point that I was making about charitable purposes—
	" . . . or that such a person has something to contribute to the company educationally which cannot otherwise be found."
	Lord McIntosh was simply ducking the question. The Government cannot, in those regulations, prescribe which people will not be desirable, so they turn the problem the other way round. Lord McIntosh continued:
	"We can say all sorts of things of that kind, but there will always be crooks."
	I hope that the Minister heard that. When asked how he would ensure that people in those companies would be fit to run schools, his noble Friend admitted that there will always be crooks.
	So many questions have been asked by my noble Friends in the other place, and by my hon. Friends in Committee, that the Government have a duty at least to attempt—so far, the Minister has not done so—to answer them. Baroness Blatch said:
	"We know that there will always be crooks. However, we should be in the business of protecting our governors of schools. They are there not to be company chairman, company members or board members, but to ensure that good education takes place in schools and that schools are managed well in the interests of the education of the children within them."—[Official Report, House of Lords, 3 July 2002; Vol. 637, c. 241-43.]
	I made a similar point earlier.
	We must also consider the burdens on company directors and on the people running the schools, as well as the question of costs. I am sure that the Minister accepts that, inevitably, there is a need for lawyers and accountants—no doubt a battery of them—to resolve the many questions in company law that may arise. Will that not increase substantially the cost of running those schools?
	Finally, if a company goes into liquidation, there is the question of whether or not the local education authority will have to pick up the tab. We have been assured that the objective of the regulations and the Bill is to provide a light touch. However, there is no evidence whatever from their construction that that will be so—far from it. More likely than not, they will increase the administrative and legal burdens and—I hope that the Minister will deal with this later—the duties imposed by statute on local education authorities would be removed.
	Many issues are involved, and as the debate progresses, no doubt we shall hear more about them. The bottom line, however, is that the proposal is not a recipe for good education. Regulations are constantly spilling out of the Government, and huge administrative costs are being imposed. The Minister, I hope, will be able to deal with some of those questions, but will have enormous difficulty discharging his responsibility, as he certainly did not succeed in doing so in his opening speech. He is fairly new to his post—I was astonished by his irresponsible handling of questions that were thoroughly canvassed in the House of Lords and considered carefully in Committee. He gave us about ten minutes of truncated explanation, but did not deal with any of our questions.

Phil Willis: It is a pleasure to follow the hon. Member for Stone (Mr. Cash). When I saw the right hon. Member for Hartlepool (Mr. Mandelson) appear on the Government Benches, I wondered whether he intended to enter the debate, and whether we would go back to old times.
	I am grateful to the hon. Member for Stone for using his expertise in these matters to ask the Government some searching questions—I say that quite genuinely. As an opportunity for us to examine the Bill, the Committee stage was a travesty. The one thing that we failed to get was a clear explanation of the Government's proposal.
	For the Minister to come along and give a very brief exposé of what the Government are trying to achieve by restoring the two clauses does him and the House a disservice. I say that rather sadly. Either there is a great deal that the Government are trying to hide, or they do not know the answers to the questions. In either case, given the appalling record of private companies formed out of public sector organisations, it is important that we get it right in the case of schools, if we go down that road.
	I shall not repeat all the arguments advanced by the hon. Member for Stone. We hope that the Minister will respond to each of the points that he made. The question who will guarantee a company's debts is crucial. I shall speak to amendment (aa) in a moment, but first I shall deal with some of the other amendments, particularly the Government's insistence on restoring clause 10. I shall return to the question whether or not the companies are limited by shares; I have a particular reason for raising it.
	Let us say, for argument's sake, that the company is a shareholding company and that the shares are, as the hon. Member for Stone said, as much as £10. The liabilities on the shareholders are therefore relatively small, compared with what could be the company's debts. What would happen to that liability in terms of the assets? As it is a school company, let us say that it is operating from a computer suite within the school, as it may well do—a computer suite that had been funded partly by capital provided as part of a joint company by shareholder capital from outside.
	The Minister shakes his head. With respect, that has been the attitude of Ministers throughout the discussion. Every time we ask a question, they shake their head as if to say, "That is irrelevant." Let us say that the company goes bust. What happens to all the equipment in the suite that was used by the company? The shareholders may pay up to their limit. Does the local education authority then come in and pay out the debtors, or the creditors, whichever is the case? If an LEA must be responsible as a backstop for every company set up under the Bill, it will have to find funds from other schools to pay those debts. We need answers to all the important questions of liability that arise from the clause.
	We never got a clear answer as to whether the school's assets would be involved in a company. Let me give the Minister another example. There is nothing to stop a group of governors setting up a company to manage the school and its assets—or even a group of schools—and transferring the assets into that company. For example, 3 E's in Guildford set up the new King's College campus. Why should not that company take over all the schools in Guildford as a single company, form a separate company limited by shares, and then be bought out by a major plc and traded on the stock market as part of that company's portfolio? What would happen at that time? What would happen to the assets if the company got into difficulties? If it wanted to realise some of its assets to fund new developments, would it be able to close the school and sell the land, buildings or whatever else? Lord McIntosh rather alarmingly said in another place that people could take profit out of the companies. The Government have made it clear that that is possible. If a company takes profit, it also needs to share the risk.

Stephen O'Brien: I thank the hon. Gentleman for giving way. He will remember that many of those questions were asked in Committee, so it is hardly that the Government have not been given notice of them. Let us return to his example of the ICT suite, where there are assets, even though their value will be rapidly depreciating. What will happen if there is recourse to those assets, but no contract between those who are damaged and the LEA? Has the Minister discussed that matter with the Chancellor, with a view to computing contingent liabilities on the Government, as the ultimate guarantor for the LEA? Those are the reasons for the hon. Gentleman's questions and why we are looking for answers. The matter is too uncertain for anybody to have certainty about entering into a contract.

Phil Willis: I am grateful to the hon. Gentleman for raising that issue. He and I know that most local authorities, especially shire local authorities, have fewer assets on their balance sheets than some individual schools. The £1.1 billion on school balance sheets exceeds significantly the assets of a number of LEAs. Recourse to the Chancellor might well be needed in such cases. In Committee, although the Minister was not present at the time—[Interruption.] I apologise; the hon. Gentleman was not a Minister at that time, so I do not hold him responsible for the answers that the then Minister gave. None the less, the Government can also invest in the companies. What will happen to that investment? Does the LEA have responsibility in that regard or is it ultimately part of the Government's liability? We need to know the answer to that question.
	The hon. Member for Stone made a crucial point about the relationship between part 1 and the rest of the Bill. The Bill is to become the Education Act 2002, but part 1 is about innovation and the ability to disregard all other education legislation. There is a huge contradiction between part 1 and the intention to introduce school companies. We must be given an answer in that context.
	My noble Friend Baroness Sharp of Guildford asked an important question in another place: what is the fundamental role of our schools? I do not think that she received an adequate answer. We have heard from the Chancellor today and I think that we shall hear from the Secretary of State tomorrow—

Estelle Morris: indicated assent

Phil Willis: The Secretary of State will make a major statement about investing significant resources in schools.

David Miliband: Not enough?

Phil Willis: The Minister must wait for my speech to find out the answer.
	We have heard today about a raft of new controls that will be placed on schools in relation to accessing the new resources. That is the reality of what we heard today: it is not freedom for schools; it is greater centralisation. We shall debate that issue on another occasion, but it is ironic that one of the Conservative amendments from another place deals with cutting bureaucracy. I am sure that the Secretary of State agrees with the premise of innovation and autonomy, but greater controls and obligations are being imposed on schools at the same time. My party and I believe that the core business of a school and its management and governors is to run the school effectively for its youngsters. I do not want companies to take away from that core function and I think that we need some assurance about that.
	It is interesting that neither of the head teacher associations supports that part of the Bill. Neither of them wants the greater levels of autonomy—[Interruption.] The Secretary of State chunters away from a sedentary position, but the private sector does not want those things either. In the private sector, which has the freedom to do all those things, there is no desire to set up companies as well.

Stephen O'Brien: I thank the hon. Gentleman for giving way a second time. In relation to his argument about regulation, is he aware that significant expertise will be required around the board tables of the new school companies to ensure that there is sufficient knowledge about running a company and the associated liabilities and responsibilities? It is difficult to imagine that such expertise currently exists in schools and governing bodies. In support of his argument that, far from enhancing freedom, the regulations that underpin the provisions will be more burdensome, I suggest that that expertise will be needed somewhere to ensure compliance with all company law regulations.

Phil Willis: That is what is so confusing. What is behind the provisions, and what is their objective? The hon. Gentleman is absolutely right that the bureaucracy, controls and financial investment that will be needed in order to achieve that objective are staggering, but the Government have yet to persuade us about the overall benefit.

William Cash: The hon. Gentleman makes a powerful point in conjunction with my hon. Friend the Member for Eddisbury (Mr. O'Brien). Does he also accept that one of the most difficult aspects of dealing with what is meant to be a standard arrangement with regard to company law, even allowing for the fact that a great deal of competence is needed, is fitting in the required knowledge with all the requirements laid down by model constitutions and regulations? Does he agree that it will be a field day for lawyers and accountants?

Phil Willis: Yes—that is why I was asking why we were taking this particular route. If the Government were proposing wholesale privatisation of the education system, that would be another story. I would not agree with what they were doing, but one could understand why they would wish to take the proposed approach. I cannot understand from the Minister's examples, or indeed those given by colleagues in another place, what great advantages the provisions have that could not already be achieved. We already have examples of schools working together to provide, for example, grant maintenance contracts or schools meals contracts. There are marvellous examples of bodies such as the Yorkshire Purchasing Organisation, which for 30 years has been providing joint purchasing arrangements for schools and local authorities. There are examples of airports, such as Manchester or Leeds-Bradford, in which local authorities are working together to provide a joint service. All the legislation is in place to enable those things to happen, yet we have had no explanation as to why we should proceed with the Bill.

Chris Grayling: I thank the hon. Gentleman for allowing me to intervene. Does he recall from the Committee stage that one of the areas in which the Government were unable to give clear answers was the possibility of the governing body deciding to close down its educational operations and contract in its entire education service from another school—possibly an independent school? At the extreme, the provisions allow steps to be taken that, I suspect, do not accord with the Government's aspirations.

Phil Willis: That might be a little too close to the bone, because I think that in many ways that is the Government's aspiration. It is difficult to know exactly what they are hiding behind as regards these provisions.
	We are concerned that the Government have not properly thought through the implications for schools and LEAs in relation to company law. We are particularly concerned that school companies should not be a means for individuals to make a profit. I ask the Minister this direct question: what is there in the Bill to prevent any individual, including a member of the governing body, from siphoning off profits? On Third Reading, Lord McIntosh of Haringey stated:
	"Let me make it clear that when talking about profits there is no question of governing bodies taking their share of the profits to use for anything other than the educational needs of their schools. There is no possibility of siphoning off profits".—[Official Report, House of Lords, 3 July 2002; Vol. 637, c. 252.]
	In Committee, however, he was less emphatic about public funds being used for private profit when he said:
	"Preventing any profit being used for purposes other than education in participating schools may in practice mean that it cannot be paid to company members other than schools. That is an unnecessary interference. There is no reason why schools should not innovate in potentially profitable ways and there is no reason why they should not bring in outside partners to help them to achieve that. They will still benefit financially from it, but that may be achieved only if they have outside partners who can participate for a profit."—[Official Report, House of Lords, 7 May 2002; Vol. 634, c. 1108.]
	There is a direct contradiction between the statements that were made in Committee and on Third Reading, and it is important that the Minister makes it clear which is right.
	That brings me to my amendment concerning whether school companies should be limited by shares or by guarantee. I want to remove the possibility of the former option because that would remove the element of potential profiteering by individuals. If the Government are determined to get the Bill through—the Minister will have to give a very convincing argument when he winds up—they must give us a guarantee that any profit made out of a public investment of funds into a company returns to the school or schools for investment and does not go to private individuals or private organisations. The amendment would limit school companies by guarantee rather than shares to ensure that no individual profits. If the Minister does not agree with that—if he believes that outside agents can invest and take a profit—he must accept that governors and teachers should also be able to invest and make a profit. I am not debating whether that is an honourable position for the Minister to take, but he must make it absolutely clear whether it is the case. If so, he will not have the support of Liberal Democrats here or in another place.

Chris Grayling: We had a robust debate about the provisions in Committee, and it is clear that the concerns that were raised in the series of amendments tabled by my hon. Friends and Liberal Democrat Members, and the whole tone of the debate, have been reflected in the other place and back here again through the amendments containing noble Lords' recommendations.
	Those concerns arise because the provisions are confused and unclear, and contain several significant weaknesses. I am at a loss, as are other hon. Members, to understand what they will really add to the Bill or what benefits they will bring to schools. There is no great demand for those steps to be taken. The Government seem to be opening up the education system to complexity and risk that it does not need. My hon. Friend the Member for Stone (Mr. Cash) clearly set out many of the issues surrounding liability, especially financial liability, and the complexities of corporate law that schools will end up having to deal with.
	The Government have failed to explain several matters. Indeed, some of the contributions made by Ministers in Committee were confused, to say the least. One such matter is LEA liability. The key question is how the LEA's ultimate liability is to be enforced in law. How is somebody who has suffered a loss as a result of mismanagement in a company established by a governing body to go through the process of getting their money back from the LEA? That is far from clear, as it is not stipulated in the Bill. We are on a wing and a prayer. The Government may be able to explain it—no doubt the Minister will say that "regulations may provide"—but there is no clear legal chain that would enable it to happen.
	Nor has there been a clear explanation of the nature of the liability that will be built up. There is great confusion about that. The then Minister, the hon. Member for East Ham (Mr. Timms), said in Committee that he envisaged two types of companies being set up:
	"One is formed to undertake procurement activities on behalf of several schools, and the other is a service provider company in which several schools come together to provide services to either themselves or other schools."
	When he went on to talk about liability, he confused the matter considerably. He said:
	"There is a distinction between the two. Local education authorities will be liable for some of the debts of procurement companies, but not for those of the service provider companies."—[Official Report, Standing Committee G, 18 December 2001; c. 170.]
	If those lending money to, and doing business with, service provider companies do not have the security of LEA guarantees, where do those companies stand in terms of liability? Who is responsible for debts? What happens if debts are secured against assets? As the hon. Member for Harrogate and Knaresborough (Mr. Willis) said, the nature of those assets is a grey area between operational activities in the school and the activities of the company. How will liability be established in the event of the corporate failure of one of the service provider companies? When Ministers use the phrase, "It is envisaged that", as they frequently have in this context, how can anyone be clear about what the Government are trying to do?
	My hon. Friend the Member for Stone referred to the complexities of dealing with company law. School governors already deal with huge amounts of complex rules and regulations. The days are long gone since governors could sit passively on the governing body, listening to what the head had to say and chipping in a few words here and there. That may have been so a generation ago, but there is a world of difference today. Governing bodies need to be sharp, to be on the ball and to have substantial professional expertise. Yet we are now saying to the all-too-few volunteers willing to join school governing bodies, "Not only do you have to take on board the very considerable regulatory responsibilities that are being placed on your shoulders"—particularly, but not exclusively, by this Government—"but if your school is to move down the road towards implementing these provisions, you will have to learn company law as well."

William Cash: Does my hon. Friend agree that one of the most extraordinary contributions made by Ministers in the other House when these arguments were being advanced was to suggest that it is just a voluntary arrangement that does not have to be complied with? That is to dismiss the whole complexity of the framework in the Bill as something that might just happen on the margins. Does my hon. Friend agree that that is an extraordinary position for the Government to find themselves in?

Chris Grayling: My hon. Friend makes an important point. From the point of view of any governor or anybody who is involved in the management of a school, there is no way in which any of these activities could be at the margins. If the school sets up a company, that person must have a duty of care and a detailed knowledge and understanding of what is going on. The provision could represent a huge diversion for governing bodies.
	The implications for the work load in schools are substantial. The Government failed to respond adequately to a point that was made about that in Committee. My hon. Friend the Member for Eddisbury (Mr. O'Brien) tabled an amendment that would have provided for the head teacher of a school that set up a company to be on the company's board. The Government said that that was unnecessary, but how can governing bodies make decisions that can fundamentally affect the school's operation, assets, grounds, space, staff and resources without the head teacher having a say in them?
	Let us consider the work load of other staff. That, too, was tackled in Committee, but again the Minister gave only vague responses. When we considered work load, he said:
	Any member of . . . a school who became involved with a company's activities would have to agree to do that. There is a variety of ways in which the member of staff could work for the company. For example, they could be on a temporary secondment, or part of the working week could be spent on company rather than school business. Different remuneration arrangements would be needed in different circumstances . . . In reality, arrangements would be best left to local discussion and agreement."—[Official Report, Standing Committee G, 13 December 2001; c. 157.]
	How would that work practically in schools? When the governing body says that it has set up a company and needs the school to take specific action to contribute to it, how many members of staff will dare to say, "No"?
	At a time when teachers' work load is already great, we risk placing on head teachers and staff considerable additional responsibilities for a measure that will provide no obvious benefits. As hon. Members have said, many schools are already undertaking the activities for which the Bill provides. The Minister mentioned common procurement; many schools do that. Many LEAs procure collectively on behalf of their schools. Schools already have the ability to work together. In Committee, the Minister suggested that schools might work together to provide common transport services. They do not need to set up a company and take on all the attendant responsibilities to do that.
	As I said in my intervention on the hon. Member for Harrogate and Knaresborough, the provisions' boundaries are unclear. A school could contract out its whole education system under the Bill. When I made that point in Committee, the Minister replied:
	"That does not sound like a likely scenario."—[Official Report, Standing Committee G, 13 December 2001; c. 157.]
	In other words, it is possible in law; it is simply unlikely.
	Let us consider the borrowing restrictions and the liabilities that the companies could accumulate. The Government are quick to say that the companies need the LEAs' permission to borrow and that everything is nicely covered. What about contingent liabilities? They are topical because the Government are keen on them and their non-appearance on national balance sheets. What happens if a company that a school set up accumulates substantial contingent liabilities that are not related to borrowing? Where is the watchdog control over that? Are we saying that LEAs are liable, regardless of what happens and of the financial steps taken by the directors? Can directors trade in the full knowledge that the LEA will ultimately pick up the bill if they do not succeed?

William Cash: Does my hon. Friend agree that the National Audit Office is taking a diligent interest in off balance sheet activities and that we are considering another example that it will have to examine?

Chris Grayling: I hope that the National Audit Office never gets the opportunity because the House will accept the Lords amendment and reject the provisions. I do not believe that the measures will provide educational benefit or generate significant cost savings for schools. They risk being a distraction to those who run schools—a job that is already greatly burdened. I hope that hon. Members will come to their senses, support the Lords and accept that such provisions should not be included in the Bill.

David Miliband: Our debate of the past hour and a half has been interesting. The hon. Member for Stone (Mr. Cash) said that he did not want to be considered difficult. I do not want to make any such accusation against him; his contributions are all part of the parliamentary scrutiny that the Government welcome because we hope that it will improve the Bill. However, I wish that he had shown a little more of the spirit of the hon. Member for Altrincham and Sale, West (Mr. Brady), who so passionately supported the concept. The debate has covered a wide range of issues, and I shall try to deal with as many of them as possible.
	Many contributions focused on liability and I shall deal with that. I shall also try to cover the more basic issues that the hon. Member for Harrogate and Knaresborough (Mr. Willis) raised. He asked what the point of the provisions were. First, I want to make an important preliminary point. No school will be able to form a company unless it gets the LEA's agreement. The hon. Member for Stone gave an example of a failing school that, not content with failing its pupils, could create a company that would fail the pupils of other schools. Frankly, that will not happen. No LEA will agree to allow a failing school to set up a company.

William Cash: The Minister knows about the exchanges that took place in another place. First, there is the question whether the LEA has the competence to handle questions on the matters that we have been discussing. Secondly, I am sure that he remembers that Lord McIntosh said that the LEA would intervene only when the companies had got into serious trouble. That is too late. We want to avoid companies getting into trouble in the first place. The Bill will not help with that problem.

David Miliband: I look forward to lengthy discussions about the operation of local education authorities as part of the hon. Gentleman's new, roving brief. We will see whether his new alliance with the Liberal Democrats survives such scrutiny. We are now in the second round of Ofsted inspections of LEAs. That is a rigorous process, and it is inconceivable that any LEA, however poor its performance, will agree that a failing school should set up a company. The Bill contains a safeguard that LEAs can agree or disagree with any proposal.

Andrew Turner: Perhaps LEAs would not agree to allow a failing school to set up a company. However, some LEAs are surprised by the failure of schools. They may already have given such schools approval.

David Miliband: We have rich data sets that explain the performance of different schools. They are based not only on raw scores but increasingly on value-added information. The identity of schools that are not performing as well as they might are clear to any LEA. Ofsted inspection increasingly focuses on making sure that LEAs are clear about that. The hon. Member for Isle of Wight (Mr. Turner) missed the early part of the debate and I do not believe that his point was valid. Out of the corner of my eye, I can see the hon. Member for Harrogate and Knaresborough twitching, and I am delighted to give way to him.

Phil Willis: I am delighted that the Minister is delighted. However, there is a genuine contradiction in the provisions. It relates to part 1, which deals with innovation. In some of the so-called failing schools or schools in challenging circumstances, there may be a need to do exactly what the Minister supports. Is the Minister saying that we want the Bill only for so-called successful schools?

David Miliband: The hon. Gentleman may be trying to have his cake and eat it. I am trying to make it clear that the provisions contain a safeguard to ensure that LEAs consider seriously any proposals for school companies.

Graham Brady: Will the Minister confirm whether it would be possible for the LEA to contract out that function?

David Miliband: It would not be possible for LEAs to do that. The Bill is clear that LEAs must give the school permission to set up a company. We focused on the financial management of companies.
	It is important that companies, like schools, are well managed. That is why we proposed a supervising authority to provide a protective framework. If a school company fails financially, each company member's liability will be limited to a nominal figure of approximately £10 in the case of a company limited by guarantee, or the amount outstanding on the shares in the case of a company limited by shares. Company members would determine the value of the shares, which may be a nominal sum and the amount, if any, outstanding on the shares would always be comfortable with the liability.
	Hon. Members asked what would happen if the company got into debt. It will be difficult for a company to get into debt through borrowing and be unable to repay the debts out of future income. We are including in the regulations the requirement for the company to seek the supervising authority's permission before it can borrow money. A company that gets into debt will have to arrange a schedule of repayments with its creditors.

Chris Grayling: rose—

David Miliband: I want to make some progress, because I have taken five interventions and I am still on my first point. [Interruption.] I shall answer hon. Members' questions in my own way. I think that I am answering them pretty accurately, but it is hard to answer them if I am not allowed to make my case.
	I shall carry on with my argument. Several hon. Members asked what would happen if a company were to fail. The delegated budget of individual member schools would not be at risk, and I shall explain why. Purchasing companies would be spending member schools' delegated budgets, and would therefore be deemed to be acting as agents of the LEA. The LEA would be liable for the company's debts, in the event of company failure, in the same way that the LEA would be liable for an individual school's debts when the school was acting as the LEA's agent. This would not be the case for service delivery companies, because such a company would not be acting as the LEA's agent. If a service delivery company became insolvent, its liabilities would not pass to its members, because it would be a limited liability company.
	If a school company were unable to pay its debts, the normal route, which applies to all companies, of placing the company in administration or winding the company up, would be open to it and its creditors. I can see the hon. Member for Harrogate and Knaresborough twitching again. If he will let me proceed, I shall see whether I can answer his question.
	Clause 2 has been mentioned by several hon. Members. Nothing in the power to innovate can affect company law. This provision will apply only to educational law, so it cannot affect liability in the way that has been suggested. School companies are not qualifying bodies under clause 2, so companies cannot be exempted from any law. All the examples, including that of sports injuries, raised by the hon. Member for Stone in his wide-ranging speech, are existing potential liabilities. The existence of companies will have no effect on them. Companies will not be running schools, so none of the issues raised in relation to the running of schools arises. The companies will not own schools' premises or employ their staff.
	The hon. Member for Stone also asked whether a school company would be required, by regulations, to take out insurance to cover potential liabilities. These companies would not be able to take over the running of a school, so they would not be liable in the example that he gave, which related to negligence and causing injury during sports activities.

William Cash: The Minister is obviously relying heavily on the notes with which he has been supplied. [Interruption.] That is a simple fact; he is just reading out what he has been given. I have the gravest doubt that what he is saying will turn out, in due course, to be the case. There is an interaction between the potential use of clause 2 and the removal of these education functions—if that is to happen. The Minister has not given the House an answer on whether it is intended to use those provisions in this context, and we take issue with the Government on that point.

David Miliband: I am not sure whether the hon. Gentleman is as well known for his generosity to other hon. Members as he is for his warnings about the dire consequences of various Government actions, but we shall see.
	The hon. Gentleman also raised the question of assets, as did the hon. Member for Harrogate and Knaresborough. It will be up to a school to decide whether to transfer assets to a company, but there would be no reason for it to do so. A school would be no more likely to transfer assets to a school company in future than it is now. Schools do not do so now, and there will be no reason for them to do so in future.

Phil Willis: The Minister said that I was twitching earlier. Is he saying that a school can use its budget share, or part of it, to set up a company and that, if it fails, it will be the LEA that will be subject to the liabilities under the new arrangements?

David Miliband: Yes. That is why a safeguard has been set up for LEAs, in that they will need to approve the setting up of the companies.

Chris Grayling: The Minister did not answer a question I asked him a moment ago. Will a company have the right to enter into leasing agreements and other off balance sheet arrangements, and would the LEA ultimately be liable if the company failed, despite having had no sanction over whether it should be set up?

David Miliband: I do not think that the off balance sheet question arises. Opposition Members are asking us to prescribe every conceivable detail of innovation that a school might exercise in relation to setting up a school company. We are saying that we have an exciting avenue for development here, and we want to give schools wide discretion to avail themselves of it, with safeguards built in.
	The question of enforcement was raised by various hon. Members. This would involve an ordinary civil action in the courts, and recovery would be by debtors in the normal way, as is the position now for all purchasing by schools. The power to innovate, for which we are legislating, has no impact on that. The hon. Member for Stone also mentioned undesirable people being brought into schools to run the companies. The Government have made it clear that they will regulate to prevent undesirable people from being members of a company; we have said so in correspondence. All categories of persons who are prevented from being school governors will also be prevented from joining school companies.
	The hon. Member for Harrogate and Knaresborough asked whether we would be distracting schools from their core function. The answer to that is no. These proposals are about encouraging co-operation between schools to help them to perform their roles more effectively, serving their own pupils and other pupils in the locality. Allowing teachers the professional development benefits of sharing their expertise with other schools can benefit both the providing and receiving schools. The hon. Gentleman asked whether that was not being done already. A certain amount of co-operation does already take place, but the power will provide clarity that the school's governing body can form a company to do more than it is able to do at the moment. Without such a power, there would be considerable doubt that a governing body could participate in a company that did more than oversee or carry out functions in relation to an individual school.

Andrew Turner: rose—

David Miliband: I have been extremely generous in giving way, and I think it is about time that we finished this debate. There are some big issues still to be debated, and I am sure that we should be attacked later for not giving enough time to them, if we did not get on and get through this part of the debate.
	The amendment tabled by the hon. Member for Harrogate and Knaresborough seeks to remove the option for companies to be limited by shares. I do not think he has made a strong case for that. When school companies choose to deliver services to other schools, they may well find being limited by shares rather than limited by guarantee a better, easier structure in which to work. I do not see why they should be denied that choice. For example, if a private sector body generated some innovative curriculum materials, it would make a profit from them. If one of our best schools did so, I see no reason why the school itself should not benefit. It is not true that a company limited by guarantee could not distribute any operating profit to its members. It is not the normal type of company structure adopted for paying profit to members, but there is scope for that to happen.
	I hope that I have answered in full all the points that have been raised. This is an important provision and I urge the House to support the Government.

Question put, That this House disagrees with the Lords in the said amendment:—
	The House divided: Ayes 320, Noes 168.

Question accordingly agreed to.
	Lords amendment disagreed to.

Phil Willis: I beg to ask leave to withdraw amendment (aa).
	Amendment, by leave, withdrawn
	Government amendment (a) to the words so restored to the Bill, agreed to
	Lords amendment:No. 13 disagreed to.
	Government amendments (a) to (c) to the words so restored to the Bill, agreed to.

Before Clause 18

Lords amendment: No. 14.

David Miliband: I beg to move, That this House disagrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this we will consider amendment (a) in lieu.

David Miliband: I hope that we shall not lose the attendance of the hon. Member for Stone (Mr. Cash), whose new-found interest in education has added a lot to our debate. I am disappointed that he does not perceive the legal aspects of the clauses with which we are about to deal.
	I recognise that the amendment is well-intentioned [Interruption.]—

Mr. Deputy Speaker: Order. I am sorry to interrupt, but will Members who are not staying for the debate please leave quickly and quietly? Not to do so is a discourtesy to the Minister and to the House.

David Miliband: I recognise that the amendment is well-intentioned, and the Government certainly support its underlying principle of reducing burdens on schools. However, as drafted it risks leaving schools in the dark about vital educational developments, and damaging the interests of pupils and those who work with them.
	We all know that there are important matters in education about which schools require guidance and information. Unforeseen events can give rise to a need for such guidance. We must be able to move swiftly to protect the rights and needs of pupils and school staff. An important example has come to the fore during the passage of the Bill. I refer to the Government's response to pressure, not least from the Opposition in the House of Lords, to make statutory provision for the welfare of children. That will require more material to be sent to schools, something that would be jeopardised by the Lords amendment as it stands. That cannot be right. I think there was support for the Government's amendment throughout the House.
	Such vital information is not the same as reams of red tape. Here we are in full agreement with the terms of the amendment: we are committed to removing bureaucratic burdens on our schools. Schools obviously exist to deliver high-quality education, and we wish to remove anything that frustrates them in performing that task. We have set out our programme for reducing burdens in the Government's regulatory reform action plan, and we have made radical changes to simplify the operation of the standards fund, making it easier for schools to gain access to a significant proportion of their budgets.
	We said last year that we would implement this Bill according to best practice, aiming to reduce burdens on those in schools. We recognise that there must be some administration for schools to function properly, but teachers' paramount task is teaching. The greatly increased number of support staff in schools who can carry out administrative work—some 80,000 now—will help schools to ensure that teachers can focus on their core tasks.
	However, the Lords amendment as it stands could be counter-productive. In the Bill we move significant detailed prescription out of primary legislation. In place of that, we will make regulations that will be less detailed and less prescriptive. That will reduce burdens on schools. The unintended effect of the amendment would be to prevent us from doing that, because of its narrow focus.
	If we imposed illogical constraints on that system, as would be the case if we were to adopt the Lords amendment, we could face the bizarre situation of being severely hampered in introducing a lighter touch schools framework, with more devolution and more decision making at school level. Surely we do not want to do that.
	There is, however, one aspect of this Lords amendment that we do think could be made workable. It is the subject of the Government amendment.
	As I have said, we want to reduce burdens on schools. One aspect of that is reducing the flow of material from central Government. I believe, and the Government believe, that a requirement to report annually to Parliament listing the Department's direct communications with schools could reinforce our determination to do so. We would report at the end of each school year. The number of communications with different types of school will inevitably fluctuate from year to year according to policy needs. Since the school year 1999–2000, we have achieved a significant reduction—of about a third—in the number of documents sent to schools. We continue to monitor all proposed communications stringently so that schools receive only material necessary for legal or policy reasons.

Chris Grayling: Does the reduction in the number of documents sent to schools to which the Minister has referred include the number of e-mails sent to head teachers by the Department?

David Miliband: I used the word "documents" advisedly, but as the hon. Gentleman will know all documents we send to schools are also sent to them by e-mail so that they are available in electronic form if that is what schools want.
	The Department has some internal controls allowing us to appraise critically what goes on in schools, how and when. The most important thing is for schools to receive the right information at the right time, and that it is easy to use. I believe, however, that an annual report to Parliament would establish the right incentives for both Ministers and civil servants, making them think not just twice or three times but perhaps four times about communications to schools. As I have said, we want to reduce the number of communications.

Phil Willis: It is interesting that the Minister can now provide information that it has not been possible to provide in written answers in the past, and we welcome that. Does the Minister agree, however, that if the exercise is to be truly valuable there needs to be a way of debating the information that goes to schools in some forum in the House of Commons? We need to be able to decide objectively whether it has some value, or whether it is simply furthering the Government's political objectives.

David Miliband: I am tempted to suggest that that is an uncharacteristically ungenerous response from the hon. Gentleman. Like him, I would like us to spend all our time debating education in the House, but there are many other matters to discuss, and I hesitate to trespass on the timetabling responsibilities of Members greatly senior to me. I think, however, that this is an indication of the Government's commitment to taking seriously the need to reduce the bureaucratic burdens imposed by communications. I think the establishment of an annual report is the right direction to take: it will provide much greater transparency in regard to the Government's communications with schools. We have proposed a new clause to achieve that.
	I believe that the amendment meets the concerns expressed in the House of Lords, and I therefore invite the House to agree to it in lieu of the Lords amendment.

Graham Brady: I hope that I can put the Minister's mind at rest. He was obviously concerned about the fact that my hon. Friend the Member for Stone (Mr. Cash) was no longer present. I am sure that the amendments have legal aspects, so perhaps if the Minister repeats his entreaties, my hon. Friend could be prevailed on to return and give the House the benefit of his legal knowledge.
	The Minister mentioned in passing what happened in the other place with amendments relating to child protection. I pay tribute to my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard), who campaigned very effectively and established cross-party support in another place. She deserves enormous credit.
	When speaking on the last group of amendments, the Minister made a little play of my enthusiasm for some of the Government's stated aims. I am not at all embarrassed by that: I stand by my support and enthusiasm for the Bill's aims of raising standards in education, increasing autonomy for schools and removing central control. Our concern throughout has been that what the Government have been doing is the opposite of what they have been saying.
	Lords amendment No. 14 is another clear example of how it has been left to the Opposition to try to put into practice what the Government say they want to achieve. After many years of the Opposition's arguing that an intolerable burden of regulation and red tape is being placed on schools, the Government are increasingly prepared at least to echo our rhetoric. According to a Department for Education and Skills press release of 8 May, entitled "Tackling teacher workload and red tape will raise standards further", the Secretary of State said:
	"It is vital that teachers spend their time teaching, not doing tasks that can be done by others".
	We wholeheartedly agree, but the acid test of whether the Government really mean what they say is found in the detail of the amendments.
	Perhaps above anything else, Lords amendment No. 14 crystallises the divide over how we should best proceed. In the light of recent disturbing evidence about the impact of excessive red tape and bureaucracy on the teaching profession—and in particular on the Government's ability to attract and retain good people—I hope that Ministers will reflect on this issue. Last Friday's edition of The Times Educational Supplement made the following encouraging point:
	"New teachers are enthusiastic about the job, but most are unsure just how long they will stay given the workload and bureaucracy."
	It continues by pointing out that, according to a new survey:
	"Only just over a third"
	of new teachers
	"expect to be teaching after 10 years".
	The blame for that is placed on work load and bureaucracy. Teachers whom I meet express concerns about work load not in the context of time spent teaching, but of time spent on the unnecessary diversions that the Government put in their way.
	The extent to which our views are gaining currency, and to which the teaching profession is uniting behind the argument that we have advanced consistently in the past four or five years—Ministers may consider this an unholy alliance—is demonstrated by the latest edition of NUT News. That may not be an obvious source for me to quote, but I am pleased to do so because it gives credit to the splendid and noble Baronesses Blatch and Miller—a description with which the Under-Secretary would doubtless entirely agree. Under the heading, "The Lords protect us", NUT News states:
	"All teachers now look to the Government for measures to reduce workload and make their teaching more effective. The Government needs to show that it shares with the House of Lords the view that bureaucracy must be attacked and that teachers need protection from excessive workload, new regulations and initiatives."
	That was a direct response to Lords amendment No. 14—a point that should give Ministers pause as they try to dismiss what is one of the most important Lords amendments.
	I should briefly point out to the hon. Member for Harrogate and Knaresborough (Mr. Willis)—I almost described him as my hon. Friend, as we worked together on the Bill rather well—that I am slightly disappointed that the amendment was passed in the Lords by Conservative and Cross-Bench peers without the support of the Liberal Democrats. Liberal Democrat peers—and, indeed, Government peers—said that they supported the amendment in principle and the spirit behind it, so I hope that we can persuade the hon. Gentleman that it would be preferable to support it in more than spirit.
	Baroness Ashton said in the other place:
	"I wish to make clear that the Government wholeheartedly support the spirit of the amendment. We understand that head teachers and teachers are under pressure."—[Official Report, House of Lords, 3 July 2002; Vol. 637, c. 259.]
	That gives rise to an important question. The Government say that they support the spirit of the amendment, and the view that something needs to be done about the pressure that head teachers and teachers are under. However, those involved in education throughout the country will want to see solid evidence that the Government really want to do something about the problem. The Government's response to the amendment shows that, unfortunately, they are prepared to be held only to the declaratory aspect of the amendment. They are prepared to publish an annual report to Parliament, setting out the progress made in controlling or reducing the volume of regulation.
	In passing, we should note the short exchange between my hon. Friend the Member for Epsom and Ewell (Chris Grayling) and the Minister, in which the latter came clean and said that he was choosing his words advisedly, and that in counting documents, the Government do not include all directives, circulars and consultation papers that are submitted to schools by electronic means, for example. Such evidence—that the Government are already trying to get round some of these constraints—is not a sign of a Government acting entirely in good faith.
	If the Government were to accept subsection (1) in Lords amendment No. 14, which states:
	"the Secretary of State and local education authorities shall have a duty to limit new regulation and to control the amount of material they send to governing bodies and head teachers",
	all hon. Members and teachers throughout the country would heave a sigh of relief. For once, they would have concrete evidence that the Government really do intend to take some action, because the Government would be placing themselves under a statutory obligation to limit regulation, bureaucracy and work load.

Rob Marris: What do those words actually mean, because they seem extremely vague in the context of such legislation? Does the phrase
	"a duty to limit new regulation"
	refer to less regulation than would otherwise have been the case? In other words, would the provision require that 50 new regulations be added, rather than 100? I suspect that that is not what the hon. Gentleman or the Lords were trying to achieve. The phrase
	"to control the amount of material they send to governing bodies and head teachers"
	is not only incredibly vague but suggests that the Department has no control at all. Is that what the hon. Gentleman intended to suggest?

Graham Brady: It sometimes seems to head teachers and teachers that the Government do indeed have no control, and that they simply spray out regulations, directives and circulars daily. In that regard, perhaps the hon. Gentleman has inadvertently put his finger on the matter. In describing the amendment as vague, he is probably trying to suggest that, if we had a duty to control the volume of paper pumped in the direction of schools—4,400 pages of documentation were produced last year, equivalent to some 17 pages a day—the danger is that useful regulations might go, rather than useless and unnecessary ones. It would be a useful discipline for Ministers to know that they had to limit the amount of dross and rubbish.

Kevin Brennan: I am following the hon. Gentleman's argument carefully. In the light of his proposal to put a statutory limit on departmental circulars, how many pages and Government directives would be appropriate in a given year?

Graham Brady: There is a very simple answer—an awful lot fewer than we have at the moment. The whole teaching profession would like such a reduction. The rhetoric from Ministers is that they want autonomy for schools and teachers to be given the freedom to teach, but in practice they are trying to micro-manage every minute of the school day in every school in the land.

Rob Marris: I should declare an interest to the House, in that my partner is a primary schoolteacher. When the hon. Gentleman responded to my earlier intervention, he referred to lessening the volume of paper. Leaving aside the electronic issue that we mentioned earlier, that would appear to be more specific than the vague wording in subsection (1) in Lords amendment No. 14.

Graham Brady: If the hon. Gentleman's partner is a primary schoolteacher, perhaps we should all wish that she were here to vote on the amendment tonight instead of him. I suspect that a primary schoolteacher would find the amendment irresistible, because it would be an opportunity to lighten the work load that is put unnecessarily on teachers. He says that the wording is too vague. I do not hold that against him because he was not in Committee with us, but if he considered the original wording, he would discover that the new subsection (1) would be one of the most precise and closely defined aspects of the Bill. The idea that the Bill should allow the exemption of schools or LEAs from any aspect of education legislation—

Rob Marris: It is very specific.

Graham Brady: That tells the House a great deal. The Bill is specific about the huge powers that it seeks to give Ministers. Those who are interested in such matters know nothing, however, about Ministers' intentions once the Bill is enacted.

Phil Willis: I am loth to help the hon. Gentleman, but will he also address the issue that the Minister mentioned in his opening remarks and which hon. Members who were not in Committee will not fully appreciate? One of the central aspects of the Bill is that it depends on secondary legislation at every step. It is the secondary legislation that will create a new raft of bureaucracy that we cannot even imagine, because the regulations have not been published.

Graham Brady: The hon. Gentleman is right. The amendment is an opportunity to reduce the secondary legislation necessary and to provide clarity for those who need to get on with the running of schools. The Government believe that they have addressed the concerns of the teaching profession that were raised in the other place. I imagine that one or two Labour Members will have received the NUT briefing on this evening's proceedings. If they have not, it explicitly states:
	"the NUT would be extremely concerned about the message Government would be giving if it sought to simply overturn the amendment without replacing it with a similar duty.
	The Government's amendment does not go nearly far enough. Teachers and head teachers will see little point in an annual report which does nothing more than describe what has been sent to schools. The amendment does not commit the Government to reducing the amount of paperwork sent to schools and does not provide any indication that the Secretary of State is prepared to stop imposing centrally prescribed initiative after initiative on schools and to finally start 'trusting teachers'."
	It is clear that the teaching profession wants that limitation on what Ministers can do to the nation's schools.
	Teachers want the freedom to teach and to have a breathing space from the torrent of regulations that are placed on them. They want an explicit and clear statutory requirement that will give some relief from what has, admittedly, been the education practice of all Governments—although this Government are particularly bad—which is to over-regulate, over-control and centralise education provision, even as they claim that their objective is to deregulate, decentralise and allow greater autonomy.

James Purnell: Does the hon. Gentleman agree that extra classroom assistants and administrative support are key to reducing the bureaucratic work load faced by teachers? Will he therefore support the extra funding announced today and will he argue with the shadow Chancellor that the Conservative party should also support it?

Graham Brady: It is obviously excellent if we have classroom assistants in schools, but we do not want teachers to have to employ accountants and lawyers so that they can process the heaps of documentation that are thrown at schools by the Government. We want teachers and classroom assistants to be able to get on with the job of teaching. Lords amendment No. 14 would deliver that.

Mark Hoban: In this afternoon's statement by the Chancellor, he talked about the joys of localisation and decentralising power. Is not that in stark contrast to the Government's failure to embrace Lords amendment No. 14? They should welcome a statutory limit, because it would accord with the new localisation of which the Chancellor was so proud this afternoon.

Graham Brady: My hon. Friend has hit on the point that the Government do not want to be subject to controls on their interfering and meddling tendencies. The Government are happy to have extra levers of control over others, but they should accept that they are the worst offender. They are producing needless documentation, bureaucracy and regulation, and taking teachers away from the task of teaching. It is not schools that need to be regulated or from which teachers need to be protected: it is Ministers. If they want to be taken seriously when they say that their aim is to allow teachers the freedom to teach, Ministers would embrace Lords amendment No.14. I hope that the Minister will come to his senses and do so, especially on this most auspicious day. I understand that it is his birthday and I wish him the happiest day possible under the circumstances. I accept that this may not be the way in which he would have chosen to celebrate his birthday, but perhaps he will offer—in a spirit of friendship—a present to teachers and head teachers and signal a genuine commitment to reducing bureaucracy and red tape in our schools.

Phil Willis: I support many of the comments made by the hon. Member for Altrincham and Sale, West (Mr. Brady) and I, too, wish the Minister a happy birthday. The hon. Gentleman made some slightly barbed criticisms about the fact that Baroness Sharp and my other colleagues in the Lords did not support the amendment. They did not do so because of subsection (3), which states:
	"Each set of regulations, circular or code of practice issued by the Secretary of State shall include a statement by him of the time he expects it will take for governing bodies or head teachers of schools or nursery schools, as appropriate, to read, consider and implement the regulation, circular or code of practice concerned."
	Much depends on the resources that schools have available, and it would be unreasonable to expect the Secretary of State to carry out what the amendment would require of him. That notwithstanding, the effect of the amendment, and the principle behind it, is right.

Graham Brady: The hon. Gentleman said that the Liberal Democrats in the other place did not wish to support new subsection (3) of the new clause that is amendment No. 14. Is he prepared to confirm that the Liberal Democrats support the principle in new subsection (1), and may we hope to have the support of his colleagues on such an amendment in the future?

Phil Willis: I never bind my colleagues in respect of what they will or will not do. The hon. Gentleman will know that he could not do that in respect of his own colleagues in the other place. However, the principle of having a statutory duty in the Bill to reduce bureaucracy and work load is fundamental to our view of developing secondary education in this country. More resources coming into schools will matter nought if the process is accompanied by endless amounts of regulation and red tape that tie up a great deal of those resources unproductively. I am with the hon. Member for Altrincham and Sale, West on that point.

Rob Marris: I believe that the hon. Gentleman used to be a head teacher; indeed, I think he used to teach my niece. Will he refer to three pieces of regulation that he would get rid of?

Phil Willis: That is a fair question, and one which the Secretary of State frequently throws at those of us who wish to see a reduction in bureaucracy. When we consider what is emerging from the Department for Education and Skills, and what emerged from its predecessor Department, we find that virtually everything has some value to somebody. The problem is that it does not have value to everybody. That is the great problem with this Government, especially in terms of education. To ascertain what is valuable to them, the individual has to read everything that comes through. When I meet head teachers—I am sure that the hon. Member for Wolverhampton, South-West (Rob Marris) has the same experience—I find that they do things and read things just in case. We would like to see discretion exercised in the initiative overload coming into schools, so that it is not necessary to follow every initiative.
	One of the problems is the way in which the Government have set up their funding streams, especially through the massive expansion of the standards fund from £0.7 billion to more than £4 billion—the sum announced in the statement tomorrow will no doubt be even greater. So much of the resources in schools are dependent on their following a certain initiative, bidding for that money and obtaining the resources. That is the exercise that lies behind the amendment.
	Baroness Ashton of Upholland recognised what the Opposition were trying to do in reducing bureaucracy: indeed, reducing it is the Government's stated aim. Yet the amendment before us is a mere sop. Anyone in this place should be able, as of right, to table a question to the Secretary of State to ask for the necessary information. The idea that it should be put together once a year as a huge concession to the bureaucracy and work load problem is insulting to the House; to right hon. and hon. Members who genuinely want to make progress; and to all head teachers and teachers. They face a huge problem, and I hope that the Minister will take this issue back rather than dismiss the Opposition's claims. When the Bill returns to another place, I hope that the Government will produce an amendment that genuinely satisfies the desire to see scrutiny of initiative and scrutiny of work load. There should also be sunset clauses for new initiatives.
	Let me refer to Baroness Blatch's amendment in another place, of which Baroness Ashton said that it
	"is lacking in that it does not address the issue of the quality of information issued."
	That is the point that has been made. She continued:
	"I know from my own experience of being both responsible for issuing information and being on the receiving end as a chair of governors until last year that it is the quality equally as much as the quantity—indeed, more so—of the communication or regulation that is of paramount importance."—[Official Report, House of Lords, 3 July 2002; Vol. 637, c. 261.]
	Yet the Government's amendment does not deal with that issue. Bringing forward a list of all the initiatives does not address the issue of what is important and what is not. I do not believe that every document issued by the Secretary of State is of equal importance.
	We shall support the Conservative party's new clause and reject the Government's amendment should they press it to the vote. I trust that by the time it returns to another place we shall have a sensible amendment from the Government that addresses the entire issue of bureaucracy and work load.

Rob Marris: Lords amendment No. 14 is bemusing: subsection (1) is vague and subsection (2) could be recorded in a parliamentary question—the criticism that the hon. Member for Harrogate and Knaresborough (Mr. Willis) makes of the Government's amendment. That does not take us any further forward in the hon. Gentleman's frame of reference. Subsection (3) introduces more red tape, and that does not take anyone anywhere. Subsection (4) is extraordinary: it tells us that there shall be "no additional burden," which again is vague and would stop fresh initiatives of any sort. The hon. Gentleman talks about discretion—

Chris Grayling: I suggest that the hon. Gentleman rereads subsection (4), which is simply and specifically in relation to subsection (3). It does not preclude additional regulation on a broad basis.

Rob Marris: I take the hon. Gentleman's point, but the amendment refers to "no additional burden" and to providing "with information". Under subsection (3), that would unreasonably fetter the discretion of any Secretary of State for Education and Skills in terms of new initiatives. The hon. Member for Harrogate and Knaresborough talks about discretion, and I am not sure how it could be incorporated into Lords amendment No. 14. I take his point, but it is extremely difficult to read discretion into the amendment that he told the House he would be supporting.

Phil Willis: I was trying to point out that neither of the two amendments is perfect. There is general agreement in the House that we need to reduce bureaucracy. Indeed, that is the Government's stated aim. We are trying to encourage the Government to frame an appropriate amendment that deals with the core issues rather than one that states that we shall have a long list in the Library.

Rob Marris: The issue of red tape has probably been before the House for 300 years. To suggest that right hon. and hon. Members have not got the message on that is extraordinary. We have had a considerable amount of regulation in schools over the past five years, but the Opposition seem to be suggesting that that was done to no end and for the sake of doing it. We have had a step change in education in schools given the results that have been produced. That has been positive. I will not bore the House with statistics that we all know. There have been improvements in education, especially in primary schools but also in secondary schools.
	The hon. Member for Altrincham and Sale, West (Mr. Brady) mentioned that he had not heard teachers complaining about work load in the classroom. Perhaps that is a paraphrase, but that is broadly what he said. I am not surprised. We have 20,000 additional teachers. Class sizes have been reduced considerably, especially in primary schools. We have 80,000 classroom assistants. It is not surprising that teachers are not complaining about work load in the classroom, given the extra resources that have been put in. The extra resources will continue to be made available, as we heard in my right hon. Friend the Chancellor's statement.
	I will not bore the House with all the figures, but 1,400 secondary schools will receive £1 million over three years. That could be described as over-centralisation, and Opposition Members have spoken about that. But when I talk to head teachers, that kind of centralisation is what they like. They like that sort of money coming in.

Andrew Turner: Perhaps the hon. Gentleman will tell me on what basis the schools will be selected, and by whom.

Rob Marris: With respect, that is a question to put to my right hon. Friend the Chancellor of the Exchequer, not me.

Andrew Turner: That is the problem.

Rob Marris: The hon. Gentleman can address his questions to my right hon. Friend. We have 1,400 schools with leadership incentive and grants. I do not profess to be an expert on those schools. A considerable amount of money has already gone into schools in the last five years, and a considerable amount more will go into them in the next three. If Conservative Members are decrying that kind of centralisation, it is incumbent on them to say what they would do instead.

Chris Grayling: The last few remarks have been extremely illuminating, and they highlight my biggest concern about many of the Government's actions, not only in education but across the board: they do not understand the consequences of what they are doing.
	The hon. Member for Wolverhampton, South-West (Rob Marris) showed a complete absence of understanding of the predicament that head teachers face and of the real resentment in the teaching profession about the extreme levels of bureaucracy and work load being imposed by unnecessary regulations from central Government. One merely has to talk to head teachers, as I do regularly, to understand the consequences of that. The most consistent message is that new, young teachers are not staying in the profession. That was amplified by the piece in The Times Educational Supplement read out by my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady). The reality is that teachers are not staying in the profession.

Chris Mole: Will the hon. Gentleman acknowledge that he slips smoothly from observations about head teachers to observations about teachers, whereas, clearly, the majority of classroom teachers will not read every one of the circulars from the Department for Education and Skills or have every regulation impact on them as individuals. The hon. Member for Harrogate and Knaresborough (Mr. Willis) suggested that, as a matter of security, teachers would read everything. Surely, the heads read the executive summaries and decide which of them are appropriate for which of their teaching staff to examine in detail.

Chris Grayling: The hon. Gentleman should visit some of the head teachers in his constituency and ask the question that I recently asked a primary school head in my constituency: "Can you show me an example of the kind of bureaucracy that is causing teachers to resent the work load that they face at the moment?" She showed me the course planning required by Ofsted, which is set out in the frameworks and curricula provided by the Department. One example struck me as demonstrating the absurdity of what we ask of our teachers at the moment.
	I was shown a course plan in which someone had planned physical education lessons for the term. It contained a detailed paragraph written at the start of term, weeks in advance, explaining a section of a PE lesson in which groups of pupils were doing star jumps. It contained phrases such as, "Divide into pairs. One child does star jumps while the other one counts, then we reverse. The other child does star jumps while the first one counts." Can the hon. Gentleman explain what possible benefit there is in expecting a primary teacher to sit down, probably in their own time, to work their way through the whole of a course plan for a term, setting out what each individual activity in an individual PE lesson will be? Do we not trust our teachers to take those decisions for themselves?
	Is it any wonder that not only teachers but heads who have to supervise this convoluted process and deal with an in-box full of e-mails from the Department every day—and who have to recruit to replace younger teachers who are saying, "Enough, I'm leaving," after three or four years in the profession—are over-burdened? I was due to visit a primary school in my constituency, but the head was not able to see me because he was too busy interviewing potential recruits to fill the gaps in his staff over the summer. That is what heads across the profession face at the moment, and it is an unwelcome and unnecessary burden that does nothing to help the education of the children.

James Purnell: Is the hon. Gentleman aware of the work being done by the School Teachers Review Body on cutting bureaucracy and freeing teachers up to teach? Does he agree that that is a proper, sensible way of reducing bureaucracy, instead of the spin to which this proposal amounts? Does he agree with the recommendation that administrative support should be provided for teachers, which will require money? Given that he is not under the vow of silence on spending pledges that applies on the Opposition Front Bench, will he welcome the extra money announced today?

Chris Grayling: This goes to the heart of the difference between the Opposition and the Government over the public spending review. This is the question that must be asked: is it sensible to tax the North sea oil industry, thereby reducing investment in the North sea, to generate money to pay for administrators in schools to help teachers to deal with the unnecessary bureaucracy—

Madam Deputy Speaker: Order. The hon. Gentleman is speaking somewhat wide of the debate.

Chris Grayling: We must not spend money helping teachers deal with administration instead of simply cutting the burden of an unnecessary work load coming from central Government.
	The Minister's comment was enlightening. I visited a special school in south London recently, and I talked to the head there about the flow of bureaucracy from the Department. She opened up her in-box, and it was absolutely full of documents, contacts and communications from the Department. We all receive large numbers of e-mails in our daily lives, so we know how long it takes us to go through them and deal with them effectively. It cannot be a sensible use of time to expect a head teacher to deal with a huge swathe of e-mails containing detailed information about their responsibilities on a daily basis.
	I am delighted that the hon. Member for Harrogate and Knaresborough (Mr. Willis) and the Liberal Democrats are going to back the proposal despite their reservations about subsection (3), as that subsection represents the nub of the problem: it is probably the most important subject of debate in relation to the Bill because it requires the Secretary of State before issuing a new regulation to pause for thought and try to understand the consequences for teachers and head teachers. On far too many occasions, the Government enforce new rules and regulations without the slightest understanding of the consequences of those measures in schools; of the time they will take; of the way in which they will disrupt the working life of the school; of the additional burden that they will place on individuals; and of how they will force people to give up their spare time, as many teachers do, to deal with the bureaucracy that they face in their daily lives. That is why the new clause deserves the backing of the House. We must take not just the window-dressing steps that the Minister's alternative amendment represents: we must take tangible steps to start reducing the work load and burden of bureaucracy that our teachers face.
	My hon. Friend the Member for Altrincham and Sale, West was asked earlier what "less" means in this regard. I question whether we need to increase the burden of regulation on our schools at all. Why do we not start to implement sunset clauses, examining rules and regulations that we no longer need and considering how we can simplify and streamline provisions? There is no need to add to the burden of regulations year by year and pass statutory instrument after statutory instrument. We need to cut, rather than increase, the overall burden.

Rob Marris: As the hon. Gentleman is talking about sunset clauses, will he tell the House which three regulations he would get rid of?

Chris Grayling: I am talking about the streamlining of provisions across the board. I shall not deal with specifics now—[Interruption.] In relation to the example of the Ofsted inquiry that I gave earlier, I would not require primary teachers to plan courses to such a high degree. I would not require teachers in the foundation stage to complete convoluted course plans for three-year-old kids in a nursery. Those are two examples, for starters.
	I hope that the House will back the new clause. We must take a first step. The Minister's proposals are not adequate; we need to take real steps to cut the burden on our teachers.

Andrew Turner: I am pleased to support the new clause proposed by my noble Friends in another place. In particular, I want to refer to three points.
	First, I want to congratulate my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) on his attribution to the Secretary of State of an understanding that there must be a reduction in bureaucracy, although I think that he is being a little generous. When the Secretary of State appeared before the Select Committee, she argued that the cloud of new paperwork did not amount to an unnecessary burden on head teachers because they did not have to read it. There may be several pieces of paper coming in daily from the Department—and doubtless many others from other quangos for which the Government are responsible—but the Secretary of State said, with great confidence, that that was not a burden on schools because heads did not have to read them. If so, I fear that the hon. Member for Harrogate and Knaresborough (Mr. Willis) was overworking himself, and that he has friends who have overworked themselves as head teachers. However, I suspect that the Secretary of State, and not the hon. Gentleman, was wrong. Head teachers want to know what additional regulations, codes of practice and responsibilities will bear down on them every day. If they do not know, they cannot direct the information to the correct teacher or administrator.
	My second point is about parliamentary questions. Hon. Members on both sides of the House have referred to the possibility of extracting information through parliamentary questions. I fear that that is not so. I have tried unsuccessfully to extract from the Department information about the additional legislative requirements placed on head teachers, governing bodies and Ofsted. In some cases, the Department has been able to answer my questions, but it has not been able to answer those about schools and head teachers. So many additional burdens—not only in the form of paper, but in the form of legislation and regulation—tumble down on head teachers and schools that even the Department itself does not keep a record. It is unable to answer parliamentary questions without undue expense.
	My third point relates to the comments of the hon. Member for Wolverhampton, South-West (Rob Marris). Subsection (1) of the new clause is a masterpiece of clarity. It says that
	"the Secretary of State and local education authorities shall have a duty to limit new regulation."
	They would have to do the limiting. They could decide on the target and they would then have to meet that target when they imposed a limit. What could be clearer than requiring them to do the limiting? We are not setting targets and we are not being unreasonable. We accept that it is sometimes necessary for the Secretary of State perhaps even to increase—I hope that she would not—the amount of material going before governing bodies and head teachers, but she would have a duty under the new clause to limit the amount of that material. Local authorities would have a similar responsibility, and that is one reason why I disagree so much with Government amendment (a), which does not refer to local education authorities at all.
	Like the hon. Member for Harrogate and Knaresborough, I would like there to be further improvements to the new clause, and that is why I want it to be returned to the other place. It should apply not only to the Secretary of State and to LEAs but to that host of quangos and other bureaucracies that are involved in education. From the Health and Safety Commission through to the Ofsted, let them all endeavour to reduce the burden on head teachers, schools and school governors.
	Subsection (3) again sets out a perfectly sensible requirement that already applies to other legislation and regulation that comes before the House. It would provide for a regulatory impact assessment. One wonders what the Secretary of State is about if she cannot see the consequence on schools of additional codes of practice, circulars or regulations. Many primary schools in my constituency have fewer than 100 pupils, and some have fewer than 50. That means that, however well or badly the Chancellor funds education, they do not have a huge number of teaching and administrative staff to deal with additional codes of practice, regulations and circulars. That point needs to be assessed by the Secretary of State and her officials. In every case, she needs to be advised that some regulation is over the top for a small school. Perhaps such regulation should not even apply to small schools.
	From time to time, we recognise that some regulations are too much for the smallest businesses, so we should also recognise that some regulations are too much for the smallest schools. That is why I will support the Lords amendment. Like the hon. Member for Harrogate and Knaresborough, I recognise that the Government could improve it further when it returns to the other place. I hope that they will do that and accept the amendment in the spirit in which it was meant. I hope that they will try to improve the existing provision rather than pressing their amendment, which would quite unnecessarily water our proposals down.

John Redwood: I wish to speak because I was very disturbed by the Chancellor of the Exchequer's announcement earlier today. It makes it even more imperative that the Government take action on the over-regulation of the school sector and LEAs. I therefore welcome any initiative that will try to reduce the burden of circulars, advice notes, instructions and regulations that emanate from the Department for Education and Skills.
	This has been a curious debate. The Government say that there is no problem, but all the head teachers to whom I and other Members speak confirm that there is a problem. The Government then say, "Trust us. Don't worry. We believe in deregulation too. It must not be overdone. We will get on with a little bit of deregulation, but not yet, not in this way, or in this clause, or this legislation."
	I urge the Government to think again, because they have unleashed a dangerous set of ideas in the Chancellor's statement about how he wishes to get value for the larger sums of money that will be offered directly to schools and to LEAs. The regulations, the advice notes and codes of conduct will presumably be integral to that. We are told that those schools that do not perform or live up to the expectations expressed in the advice notes and the circulars may be subject to all kinds of torture coming from the centre. There may be direct intervention at the school level. For example, the Government may wish to remove a head teacher or change or influence the board of governors.
	Alternatively, the Government may wish to override local democracy if they judge a whole local education authority to be inadequate or non-performing. They will then start a process that will usurp the local democratic process, with a view to trying to take over the management of the authority itself. By that route, they will have influence over a school. That is why we must be ever more critical of and sceptical about the many centralising directives, codes of conduct and advice that come from the Government. They will probably be used as a stick with which to beat schools and LEAs if the Government do not like the way they are developing—whether they are good, bad or indifferent.

David Wright: Does the right hon. Gentleman therefore seriously support failing schools?

John Redwood: Of course I do not support failing schools. However, there are two ways in which they can be dealt with. First, in the world that I like—it is partially available to the Government, and the provisions for this could be strengthened—parents would have a real choice. They would be able to send their children to a better performing school and the poor performing school might then get the message and would have to take action to correct itself. Secondly, a democratically elected LEA would either take action or, through the ballot box, local people would make their preferences clear. They would throw out the council that presided over the failing school or schools and would produce an alternative.
	I do not like a Government who centralise so much by directive, instruction and code of conduct and who set up methods by which they will use those codes of conduct to judge or prejudge the schools and LEAs, with the possibility that local democracy and democratic boards of governors would be overridden—even when the local community might think that the school was good but the Government, for one reason or another, decided that it was bad. I therefore urge the House, particularly in the light of today's chilling words from the Chancellor—he does not seem to like local democracy or democratic school governors—to be even more wary of a Government who will not reduce the number of centralising directives. They say that they wish to decentralise, but every action that they take centralises. They say that they trust teachers, LEAs and schools, but we heard from the Chancellor today that they do not trust any of them and wish to challenge and judge them by all sorts of methods. It is therefore vital that the House express the clear wish that there must be much less regulation and central control.

David Miliband: This has been a notable debate. I am grateful for the many congratulations on my birthday. However, I look forward to the day when, rather congratulating me on my birthday, the hon. Member for Altrincham and Sale, West (Mr. Brady) will congratulate the Government on investing in our education system and on putting 24,000 more teachers into the system. I look forward to the day when he will say that he will defy his party, which is ready to cut the education budget. Until then, his professions of wholehearted support for the aims of improving standards in our schools will ring very hollow to all those Labour Members who have sat through the hour and a half of this debate. When he professes support for raising standards but offers no support for investment in information technology or for reforming the teaching profession, we will not believe him.
	The debate ranged wide of the amendment and I want to pick up on two main points. We discussed at length the situation in the teaching profession. The latest figures suggest that 80-plus per cent. of newly qualified teachers are in the profession three years after entering it. So it is not true to suggest that over-regulation is causing a mass exodus. Hon. Members know that the Government are committed to the fundamental reform of the teaching profession. We want to reform the contact time that teachers have with children and to improve their productivity. We also want to improve the support of the teaching profession by expanding the classroom assistant scheme and by providing the learning mentors and learning support staff who do so much in our schools to support teachers. In addition, we want to improve school leadership so that teachers spend their time on teaching.
	There is an issue about regulation; it is a matter on which all hon. Members should have some humility. Governments historically have not been good at limiting their tendency to over-regulate. I will not say that everything is fine. The hon. Member for Harrogate and Knaresborough (Mr. Willis) put his finger on an important point. There is a tendency to believe that because an initiative is right for some schools, it needs to be advertised and sent to all schools. His comment was constructive and we will take on board the idea that, in our desire to ensure that no one is left out, we sometimes overburden those who want to get on with their work.
	The debate was noteworthy. A couple of hon. Members were asked to name regulations they would cut. The House has welcomed the increased regulation on child welfare introduced by the Bill. We know that the literacy and numeracy strategies have been hugely successful in raising standards in primary schools. We also know that the key stage 3 strategy, which involves regulation, gives many teachers much needed support in the critical middle years of secondary schooling. It would be folly to retract those regulations.

Graham Brady: The Minister says that we have been unable to name regulations that should be removed. Can he name three of the 4,770 regulations issued by the Government in the past year which, on reflection, might not be necessary?

David Miliband: Let us understand how the Opposition reach that figure. A document that is sent to primary schools and to secondary schools is counted twice even though it is one document. So one document counts twice in the Opposition's new mathematics. We should not fall for the hon. Gentleman's fuzzy maths.

Adam Price: The Government have seen fit to extend the scope of their amendment to the National Assembly for Wales. Did they seek the approval and consent of the Minister for Education and Lifelong Learning in the National Assembly? If so, was it given? There is an appetite in the National Assembly to move much further on the issue. Surely that is a matter for the National Assembly.

David Miliband: The hon. Gentleman knows that Labour is committed to working closely with our partners in the devolved bodies, and I can reassure him that we consulted the relevant authorities in Wales.
	The Government amendment is a serious step forward. I urge the House to welcome it.
	Lords amendment disagreed to.
	Amendment proposed: (a), in lieu of the Lords amendment.—[Mr. Miliband.]

Question put, That the amendment be made:—
	The House divided: Ayes 307, Noes 154.

Question accordingly agreed to.
	Amendment (a) in lieu of Lords amendment No. 14 agreed to.

Clause 32
	 — 
	Federations of Schools

Lords amendment: No. 23.

David Miliband: I beg to move, That this House disagrees with the Lords in the said amendment.

Madam Deputy Speaker: With this we may discuss Government amendment (a) in lieu of the Lords amendment.

David Miliband: I know that the whole House will agree that there must be strong partnerships between parents and schools. That is important for children, for schools and for parents. A good and open relationship between home and school can make a huge difference to a child's progress. Annual parents meetings are one means to that end: a positive and productive partnership between parents and schools that contributes to raising standards. Of course, meetings can be particularly important where parents have concerns that they want to express.
	Currently, governors are obliged to hold meetings once a year. They are intended to be an opportunity for all parents to influence the running of schools, and at present they are subject to considerable regulation. When we introduced the Bill, we proposed to re-enact the existing requirements essentially as they are. On reflection, however, we accept the Lords' view, expressed in amendment No. 23, that there is no need for detailed regulation of the meetings. Since they were introduced, they have been prescriptively regulated, but we agree that the detailed arrangements can perfectly well be left to schools.
	We want to retain the current exceptions from the general duty to hold parents meetings, as I shall explain in due course. We are ready to go further and to consult on whether there are circumstances in which the requirement could be further relaxed, especially where schools can demonstrate that they have involved parents thoroughly in the life of the school throughout the year. Although we cannot accept the Lords amendment, because it would leave us with a clause that does not legally serve its purpose, we very much accept its thrust.
	There is an important principle here that will be supported across the House. Governors should give parents the opportunity to hold them to account for what they are doing. The requirement left in the Bill by the Lords does not quite do that job, because it does not specify the purpose of the annual meeting. As it stands, there would be no requirement on governing bodies to allow parents to present their views on how their child's school was being run, or might be run in future. Schools would be able to claim that they had fulfilled the duty to hold an annual parents meeting by inviting parents to a party, a sports days or a school play. I hope that the House agrees that we need to tidy up the matter.
	The removal of the regulation-making powers would also put some schools in a worse position than they are in now, because it would remove the possibility of exemption from that duty, to which I referred a moment ago. For example, at present special schools established in hospitals, or maintained schools where at least 50 per cent. of the pupils are boarders, do not have to hold annual parents meetings if the governing body of the school concerned does not think that it would be practicable to do so. Many of those schools would find it extremely difficult to persuade any parents to attend annual parents meetings. We do not believe that they should be required to do so in future.
	As we have said throughout, we believe that if schools have held a meeting to discuss an Ofsted report, they should be exempt from a requirement to hold a further meeting. We want to ensure that parents have an annual opportunity to hold the governors to account, but we do not want that requirement to be more burdensome than absolutely necessary. As I have said, we are prepared to look further to see whether there are other circumstances in which it would be right to relieve schools of that duty. We will invite suggestions on that when we come to consult on the draft regulations and guidance. I do not want to revisit a previous debate, but this issue might be one in which we can achieve a measure of deregulation that is welcomed by both sides of the House.
	The Government amendment closes the unintended loophole created by the Lords amendment, so that only a meeting in which the governors can be held to account is counted as an annual parents meeting. It also ensures that there can be exemptions where it does not make sense to hold a meeting. The annual parents meeting is a backstop, and it is important that we keep it; but I hope that the House will join me in supporting the Government amendment, which accepts the thrust of the Lords amendment while ensuring that the basic principle of parents meetings and the current exemptions are retained.

Graham Brady: Given the consensual tone in which the Minister has presented the Government's response to the Lords amendment, I do not want to be too strongly controversial or party political—the Minister knows that that is not in my character anyway. However, I am tempted to make the observation that if only the Government had not, at earlier stages of our consideration of the Bill, denied the House of Commons the chance properly to scrutinise the Bill, we might have saved both ourselves and another place considerable effort. The clauses relating to annual parents meetings were among those many clauses that, sadly, fell victim to an extremely arbitrary timetable and the use of so-called knives throughout the Bill's Committee stage. It is sad that on a matter on which, as the Minister has shown, there is room for agreement across the House, as well as room to make sensible improvements to legislation, the use of procedural devices should have prevented consideration that might have enabled those things to happen.
	In Committee, I tabled an amendment that would have had a slightly different effect from the Lords amendment. The detail of that amendment was to provide that a school would not need to hold a parents meeting annually unless there was a requirement or demand to do so from a certain number—a small number—of parents. The objective was to provide the sort of backstop that the Minister rightly says is important. Unfortunately, because of the timetable and the use of the knife, the Committee was unable to debate not only my amendment but this entire part of the Bill. Had Members of Parliament been given an opportunity to do their job properly, we might already have arrived at the sensible agreement towards which we are now moving.
	The Minister has spoken of a desirable removal of unnecessary regulation. On the previous group of amendments, we were seeking precisely such an example of where it might be possible to remove some elements of unnecessary regulation without damage. The other place has made a sensible proposal that is designed to remove unnecessary regulation of the way in which parents meetings are held—how they should be publicised and their precise format. I am sure that most hon. Members on both sides accept that that is unnecessary detail for primary legislation.
	The Government amendment specifies the minimum regulation necessary for the meetings, providing only that they must take place and that they must be an opportunity to hold the governors and school to account, and stating that in certain circumstances exemption from the obligation to hold a meeting is possible. The Minister mentioned the circumstances in which a meeting to discuss an Ofsted report has already been held. As I read it, new subsection (3) would create the sort of regime that I sought at an earlier stage of consideration, but would do so by regulation.
	I would welcome clarification of whether, under new subsection (3), the circumstances in which there is no need to hold an annual meeting could be extended to include a presumption that an annual meeting may not be held unless certain circumstances prevail. I simply wonder how much latitude there is in the new subsection; it seems on the face of it that the provision could be interpreted quite broadly. I have no difficulty with that, so long as a backstop position remains—a guarantee that parents will have an opportunity to hold the school to account when there is a need to do so.
	We want to avoid meetings being held unnecessarily—perhaps a meeting has already been held, or the school's experience is that when an annual meeting at which governors and the head teacher can be held to account is convened, no parents attend. It is a question of finding a sensible way forward.

George Osborne: My hon. Friend is making an excellent speech. Does he agree that it is important that the Minister gives us a clue as to the likely nature of the regulations issued under new subsection (3), so that we have some idea of what he has in mind?

Graham Brady: I am grateful to my hon. Friend and neighbour for his helpful intervention, in which he tries precisely to pin down the Minister on the key point. The Opposition have no difficulty in principle with the fairly broad provisions of the permissive new subsection (3), which states that regulations may specify
	"the circumstances in which a governing body are to be exempt from the obligation imposed by subsection (1)."
	However, if regulations are to be the instrument used, it is not only appropriate but, as my hon. Friend suggests, necessary and important that at this point the Minister puts a little flesh on the bones of what the Government envisage those circumstances being.

Andrew Turner: Does my hon. Friend agree that the provision on annual parents meetings was a necessary part of previous education legislation? It was part of either the 1986 or the 1988 Act—I cannot remember which—and was designed in an era in which parental choice was far more restricted than it is now and there was far less parental representation on governing bodies than there is now. None the less, it is necessary to provide that such meetings should be held until we reach that fortunate position in which there is total parental choice and schools that do not respond to their market as they should do not need to be prompted by means of meetings, but are instead prompted by means of the exercise of parental choice.

Graham Brady: I am grateful to my hon. Friend, as I was throughout Committee, for his helpful and knowledgeable contributions. He is right that the circumstances or ground rules have changed since the provision was introduced. I set out to be helpful and accommodating to the Government, but he brings me back to the formula which I sought to float in Committee: there should be a provision to allow parents to require an annual meeting to take place if one would not otherwise take place. I should be grateful for the Minister's elucidation on whether, in any regulations that he may introduce, if an exemption is granted, it would be appropriate to set out the circumstances and a mechanism by which parents could overturn it. If there has been a meeting with Ofsted to discuss an Ofsted report in general terms, it may not be necessary to hold a further parents meeting. There may be a material change in a year in which a meeting has already taken place, in which case parents should have the opportunity to require another meeting. I would be grateful for clarification from the Minister on that point.
	No debate of the provisions of this unusual Bill would be complete without looking at the huge scope of powers to make exemptions under part 1, particularly the ability to make exemptions for the purposes of innovation. As we know, part 1 allows for exemption from any requirement in education legislation. In Committee, we clarified the fact that the provisions to make an exemption from the requirements of education legislation are self-embracing—they include measures in the Bill. I therefore urge the Minister to consider in what circumstances a school may seek to deviate from the regulations provided for under Government amendment (a). Is he prepared to give a clear and definite answer this evening about whether he would exclude exemptions for the purposes of innovation from measures on parents meetings, or are there circumstances in which he would be prepared to contemplate allowing a school to make its own amendments to the regulations?
	Finally, throughout the progress of the Bill, there has been agreement between Members on both sides of the House about reducing the burden of regulation on schools. I welcome the fact that at this late stage in consideration of the Bill, Ministers are prepared to accept that there is room for movement and scope for relaxation of the law. We can therefore make progress on removing an irksome, if minor, aspect of regulation that impinges on schools. I welcome the extent to which the Government have changed their position, but I wish that the problem could have been dealt with earlier, as clearing it up would have saved us and another place time.

Chris Mole: I, too, welcome the reduction in the prescriptive arrangements for annual parents meetings. The hon. Member for Altrincham and Sale, West (Mr. Brady) asked whether I had met any head teachers recently. I was a governor until just after my election at the beginning of this year, which is pertinent to our debate because, like many governors up and down the country, I have spent many happy evenings sitting with my colleagues, consuming small mountains of peanuts, Twiglets and cheese and small lakes of wine and coffee as we waited for parents to come to meetings, the agendas for which were prescribed under the previous Government, as the Opposition pointed out.
	That was a dispiriting experience for my governor colleagues. We have talked about the challenge of recruiting and retaining teachers, but there also remains a challenge about recruiting and retaining school governors. Dry, prescriptive agendas for things like annual parents meetings tend to put governors off. Occasionally, however, it is right that there should be an opportunity for governors to hear parents' voices. When, under the previous Government, the school where I was last a governor wanted, for sensible budgetary reasons, to change the number of days of swimming that it could offer during the year, a sizeable number of parents managed to come and register their concerns.

George Osborne: The hon. Gentleman's experience as a governor is illuminating. Could he throw some light on his point about the retention of governors by explaining why he ceased to be a governor?

Chris Mole: When I became MP for Ipswich, I did not believe that I would have enough time in my constituency to attend governors meetings. I should be interested to know how many Members retain such a role and believe that they do it justice.
	The annual parents meeting provides an opportunity for parents to raise issues with governors. I believe that my hon. Friend the Minister has said that the framework introduced by the previous Government was carried over into the Bill, but accepts that it should be looked at again, thus giving schools a welcome flexibility on things like school plays, cheese and wine evenings and fairs or any opportunity that allows the schools to bring parents in and hear their views.

Graham Brady: My understanding was that the Minister was concerned that schools should not count a school play, sports day or cheese and wine evening as the annual meeting.

Chris Mole: I did not hear the Minister say that, nor was I suggesting that he did. We want such events to provide an opportunity for the annual parents meeting to be held at the same time. My understanding is that such an arrangement may have been prescriptively precluded by the previous framework.

Andrew Turner: Does the hon. Gentleman accept that although the framework may preclude holding the annual parents meeting at the same time as a play, it does not preclude holding it before or after a play, or before or after a social event? Many governors, governing bodies and head teachers have exercised considerable ingenuity in trying to attract parents to annual meetings by running them alongside, or at the beginning or end of, other functions.

Chris Mole: The hon. Member for Tatton (Mr. Osborne) asked what interests school governors in remaining school governors. I suggest that they are motivated by the chance to raise standards and improve opportunities for the children in the school, not by the challenge of finding creative ways of circumnavigating the prescriptive legislation introduced a number of years ago by the Government whom the hon. Member for Isle of Wight (Mr. Turner) and his hon. Friends supported.
	I welcome the Minister's suggestion that he will look for ways of giving schools new flexibility to strengthen the partnership between parents and governors. We all know that the most successful schools are the ones where there is that tripartite, if not a quadripartite, partnership, primarily between heads, governors and parents, but also with the local education authority. I welcome the proposals.

Phil Willis: We on the Liberal Democrat Benches wholeheartedly support the amendment. We consider it a sensible compromise that takes us forward. On the previous set of amendments, we discussed the need to get rid of bureaucracy. The current arrangements are a classic example; they clearly have not worked and need to go.
	I had to organise a set of annual parents meetings, and I did so with great dread. I remember that in one round of parents meetings in 1996 in Leeds, the average number of parents who came was 10, and in some cases, we did not get a single parent attending the annual parents meeting, so I welcome the changes. However, they do not remove one of the great challenges facing all of us: how do we engage parents in the schools?
	The hon. Member for Ipswich (Mr. Mole) made a number of references to the prescriptive nature of the previous Conservative Government. I believe that the existing provisions were a genuine attempt to engage parents in what was happening in school, but it did not work. My worry is that we are in danger of saying, "Phew! That's that out of the way. Let's fall back and not engage our parents." One of the sadnesses, to me, is that whenever we have formal meetings with parents, it is usually because there is a crisis over the swimming or over something that has occurred because of an Ofsted report.
	I am reminded that when I was recently in the United States, in North Carolina, the head of one school was talking about parents meetings and said about public meetings, "Few people ever come with affirmation in their minds." There is some truth in that. We need to encourage parents to come into school with affirmation and with questioning in their mind.
	I support subsection (3) and we look forward to those regulations. Will the Minister give the House a guarantee that he will consider the annual report to parents? The requirements for that are incredibly prescriptive. I can remember the first year that I did an annual report to parents. I covered all that the Government said we had to do, and it ran to about 15 pages. When I started to condense it, it became a meaningless document, rather like an "In Touch" leaflet from the Conservatives. I ask the Minister to include—possibly when the matter returns to the House of Lords—a simple additional subsection deregulating the annual report to parents. We welcome the initiative.

Andrew Turner: I, too, support the broad thrust of the Government's proposal in respect of annual parents meetings. It is important not to allow the hon. Member for Harrogate and Knaresborough (Mr. Willis) to fail to take credit where credit is due. In my experience, an annual parents meeting that is badly attended is a sign of a well run school, and a sign that parents in general are happy with the way in which the school is being managed, and with the way in which the governors and head teacher are conducting affairs.

Stephen Twigg: Not necessarily.

Andrew Turner: I notice that hon. Members on the Government Benches shake their heads at that assertion. I hope that they do not wish to condemn the performance of the hon. Member for Harrogate and Knaresborough in his previous incarnation. I accept that on occasions it is difficult to provide the open and welcoming atmosphere, or perhaps schools are less successful at providing the open and welcoming atmosphere that they should provide to encourage parents to attend the annual parents meeting. On those occasions, I am sure that a little lubrication of the kind referred to by the hon. Member for Ipswich (Mr. Mole)—or even a lake of lubrication—may be helpful.
	The thrust of the Government's amendment is right. However, I echo the remark of my hon. Friend the Member for Altrincham and Sale, West about the possibility of a back-up. If the Government decided to remove all requirements for the governors to hold a parents meeting annually, perhaps they would consider a back-up provision enabling parents to require such a meeting to be held if they so wished. I can think of certain circumstances in which the Government might consider that appropriate, especially in the case of the exercise of powers to suspend the statutory requirements in clause 2.
	If the governors were, for example, seeking the Secretary of State's approval to suspend the statutory requirement that prevents them from charging for certain school functions, that might be a matter on which parents should be empowered to call a meeting. Alternatively, the Government might set that down as an exemption of a governing body from the requirement to call an annual parents meeting.
	It is important to recognise that we have a mixed economy of schools, not only in terms of the huge—and, indeed, burgeoning—number of different types of school that the Government propose, some of which reflect rather well on what went on between 1988 and 1997, but in terms of the amount of choice that parents have. Frequently, my suggestion that Government and local education authorities should allow parents greater choice has been countered by the assertion that if choice cannot be provided in rural areas, it is wrong for it to be provided in urban areas. That is tantamount to saying that because we cannot provide choice everywhere, we should provide choice nowhere.
	I do not take that view at all. Indeed, I should have thought that where there is less choice, there needs to be marginally more safeguards and more prescription, but where there is great choice, that is exactly the sort of condition in which there needs to be less prescription and fewer safeguards, because parents have the safeguards in their own hands. They can choose schools of different ethos, different appearance—

Madam Deputy Speaker: Order. May I remind the hon. Gentleman of the amendment that we are discussing? He seems to be going rather wide of it.

Andrew Turner: Indeed, Madam Deputy Speaker; I am grateful for your guidance. One of the bases on which such choice may be exercised is whether a school decides of its own volition to hold an annual parents meeting.
	I, too, support the broad thrust of the amendment, but I am interested to know whether a change of the sort that it proposes would have to lead to the promulgation of a new set of regulations or whether existing regulations could be cross-applied. In the context of the previous amendment, we might need to consider whether consultation on the new regulations would in itself place a new burden on teachers, heads and governors.

David Miliband: This has been rather a good debate and I shall put aside the voluminous facts and figures that I have been given to help me to rebut the outrageous claims of the hon. Member for Altrincham and Sale, West (Mr. Brady) about the desultory nature of the Committee stage. I shall put them aside in the interests of the new co-operative spirit that is pervading our discussion.
	What we are talking about is getting the right balance between encouraging all governing bodies to have a genuine partnership with their parent communities and regulation that is "irksome"—a word used by the hon. Member for Altrincham and Sale, West that I want to return to later. The Government have acknowledged that annual parents meetings have been over-regulated in the past and have genuinely listened to the concerns expressed about meetings. We think that we have come up with a workable solution by deregulating some processes and procedures and limiting the bureaucracy associated with the meetings.
	The amendment is an example of where the Government's much-maligned approach in the Bill may serve a purpose, as it gives us scope to go further in future in relieving more schools of the duty to hold meetings where they have already given parents the opportunity to have their say. That will benefit schools, while ensuring that we retain the essential right of parents to question the governing body and the head teacher about the way in which their child's school is run. That is why I return to the notion of balance. We want to keep a situation in which parents have some weapons in their armoury to ensure that accountability is maintained.
	The hon. Member for Altrincham and Sale, West took us back to the happy days of his amendment that was never discussed in January and February and to his presumption of not having a meeting. Despite my new role, something in me thinks that introducing legislation not to do something or with a presumption that something will not be done is a rather backward way of doing things. We are trying to express our presumption that school governing bodies should have a genuine partnership with their parenting communities, and we want to give them different ways of giving effect to that intention. He may come to think that his use of the word "irksome" in relation to parental meetings may be slightly over the top. There are many examples of parental meetings that work well and we should not denigrate the efforts that go into making them a success and a useful part of parent-governor dialogue.

Graham Brady: First, I am sure that the Minister will agree that a requirement to hold a parents meeting may appear irksome to a school in the circumstances to which the hon. Member for Harrogate and Knaresborough (Mr. Willis) referred, in which no parent attends the meeting. The regulation may certainly be irksome in that context. Secondly, he dealt only with the first half of the amendment that was never moved—the presumption that there would not ordinarily be a parents meeting. May I ask him for his thoughts on the second part, however, and the idea of a positive mechanism in which a requisite number of parents would have to ask for such a meeting?

David Miliband: The hon. Gentleman anticipates me. If he will forgive me, I shall come to that point in a few moments.
	The hon. Gentleman asked about the criteria for exempting schools from the requirement to hold a parents meeting. The overriding criterion must be that there is evidence to show that a genuine partnership exists between the governing body and the parental community. There is a need to prove that that relationship exists. I am in danger of skiing off-piste, so I must be slightly careful, but I shall give some examples of what might count as evidence of genuine partnership. There might be year-group sessions in which parents from different years are brought together to discuss provision for a particular year group. When a school is trying to achieve serious dialogue with parents in different year groups, it would seem odd subsequently to force a great gathering of the whole school. That is just one example that springs to mind. Different schools may organise different patterns of meetings. There may be discussion forums in which parents are brought together to discuss different aspects of the school's policy.
	It may also be worth our while to think about cases in which the governors' attempts to hold meetings have not been successful. Perhaps we need to think about whether that indicates that the governors are not trying hard enough or not offering the right sort of wine and cheese—or pie and peas in my part of the world—but it may also be evidence to suggest that such meetings are not an appropriate way of achieving the sort of discussion and dialogue that we want.
	In terms of the overriding criterion of partnership, but a keenness to find ways of achieving it that are appropriate to the school, I should like to refer to the notion of the trigger mechanism mentioned by the hon. Member for Altrincham and Sale, West both today and in his amendment. If we are convinced that our overriding criterion of partnership is fulfilled—it must be evident before exemption is given—the trigger mechanism will not be necessary. If there is genuine partnership, it will be the reason why there does not have to be an annual meeting. Layering a new load of bureaucracy on top by introducing a trigger mechanism is over-egging the pudding.

Phil Willis: rose—

David Miliband: I am about to come to the hon. Gentleman's point about annual reports, which I find very exciting.

Phil Willis: I am delighted that I have been able to excite the Minister. Before he leaves the trigger mechanism, may I ask him to think very carefully before introducing such a provision? A trigger mechanism that can be invoked by 10 parents may cause a real problem, especially in schools where groups of militant parents have an axe to grind as regards a particular teacher.

David Miliband: I apologise for not articulating my point clearly enough. We do not propose to introduce a trigger mechanism. [Interruption.] I assure the hon. Gentleman that when I say that we do not intend to do it, that means that we do not intend to do it. We are in happy agreement in that respect.
	The hon. Member for Isle of Wight (Mr. Turner) urged us to trust markets rather than dialogue as the answer to the need for proper links between governing bodies and parents, but one cannot rely on parental choice alone to provide the sort of engagement that we are seeking to promote. It is an important part of the equation, but the right to exercise a voice, as well as a choice, is an important part of the schooling process, and we should welcome the chance for parents to have a serious and deep involvement in their children's education. I would be very wary of pretending that markets can substitute for that dialogue.
	I conclude with the exciting point about annual reports. If the word "irksome" can be applied to parents meetings, for many schools the annual report requirements are indeed irksome. My hon. Friend the Member for Ipswich (Mr. Mole) hinted at that when he suggested using the provision and the regulations that will follow it to think broadly about how we can achieve the right sort of light-touch involvement from the centre. I have glad tidings for the House—the Bill already provides an opportunity to deregulate annual reports. That is not a birthday or Christmas present, but merely continuing evidence of the Government's serious commitment to deregulation for which the House affirmed its support only half an hour ago. That power to deregulate annual reports is the merit of the approach that we have taken in moving the detail of the Bill to regulations. I must provide some context for my glad tidings. Hon. Members will have to agree to pass regulations to achieve the deregulation of annual reports that has gained support across the House.
	I assure the hon. Member for Harrogate and Knaresborough that we want to consider the structure of annual reports in terms of what is required, when it is required and how they are required to be written. We can try to ensure that that accountability operates without in any way undermining a school's accountability to its parent community.

Chris Mole: If my hon. Friend were to take that path, it would be another factor that would aid the recruitment and retention of school governors.

David Miliband: We all owe a debt to our school governors, and we want to make their contribution as productive as possible. Let us consider annual reports, but let us not, when the time comes, score points against each other about the regulation that may be required to achieve that important step forward.
	Lords amendment disagreed to.
	Government amendment (a) in lieu agreed to.

Clause 41
	 — 
	Schools forums

Lords amendment: No. 27.

David Miliband: I beg to move that this House disagrees with the Lords in the said amendment.

Madam Deputy Speaker: With this it will be convenient to discuss Government amendments (b), (c) and (a) to the words so restored to the Bill.

David Miliband: Collaboration between schools and LEAs is an integral part of the new funding system, and we want that partnership to be effective throughout the country. The forums that we are about to consider put that principle into practice. I hope hon. Members will forgive me if I dally slightly longer than normal to explain the Government's approach fully.
	Our debates on the Bill have not shifted our perspective that forums have an important role under the new regime. We have always said that some LEAs have effective consultation arrangements on funding matters. However, that is by no means the case in every authority. Clause 41 provides a real opportunity to ensure that schools in every area have a voice on a range of matters that are directly relevant to school funding. We are in the era of the self-managed school, where the delegation of school funding has greatly increased. Given that landscape, it is only right that local schools have the opportunity to articulate views on financial matters that affect them, in partnership with their LEAs.
	In considering the attempt to remove schools forums from the Bill, we have the benefit of the consultation exercise that we launched in May. It ended last month and we have been able to consider the results, which I should like to report. There were a little under 200 responses in the period for reply. They showed general support for the concept behind schools forums: partnership and consultation on managing the schools budget, which clause 39 would create. We therefore believe that we were right to include schools forums in the Bill and to persist with them. As one school said,
	"the establishment of a schools forum on a statutory basis is absolutely necessary as a part of the new framework of school funding and it would be a major breach of faith if the proposals were to be dropped."

Andrew Turner: The Minister said that 200 people responded. How many were consulted?

David Miliband: I do not know the figure off the top of my head, but I shall intervene later to provide it or include it in my winding-up speech.
	The National Assembly for Wales strongly backs schools forums. It set out its proposals for them in "The Learning Country", the policy paper that it published last year.
	We have also received strong backing for forums from bodies such as the National Association of Head Teachers, the Secondary Heads Association, the National Governors Council and other schools organisations. I shall quote an extract from a letter that we recently received from the SHA. It states that
	"the overwhelming majority of our Council believes that the Schools Forum proposal should go ahead and we very much hope it does not get lost in the parliamentary process".
	The Foundation and Voluntary Aided Schools Association wrote:
	"We do see these as a very significant step towards bringing informed professional judgements to bear on local LEA funding . . . we have tried to get across . . . how strongly we feel on this."
	Debate on schools forums in the House and in another place has been about two main issues—the way in which forums are to be constituted, and their functions. We have tried to ensure that authorities are not required to change arrangements that work well and are designed to establish proper dialogue between schools and LEAs over the allocation of funding.
	We want to tackle practice that does not work well and reinforce rather than disturb good practice. A dialogue between an LEA and its schools on the management of the schools budget is essential, and there will be different ways of achieving that. However, forums have been identified as an important factor in facilitating a mutual understanding of budget management. Examples that have been brought to our notice include the Bath and North-East Somerset LEA's school budget forum; Croydon LEA's leadership groups; Hampshire's standing conferences for head teachers, and the forum established by Telford and Wrekin LEA. We want such local arrangements to be able to continue with little or no change, and other LEAs to be able to design their schools forums to evolve out of bodies such as head teacher consultative groups.
	Our amendments therefore propose much greater flexibility. There will be local flexibility about the balance between head teacher and governor representatives, and the size and method of selecting school members. Elected members of the LEA will be allowed to join forums. The Learning and Skills Council will have only observer status. The quorum requirement will be relaxed. Costs will be charged to the schools budget, but detailed provisions will be for local decisions.
	We will give guidance on a range of issues, but this will be non-statutory and for each LEA to use as it wishes. Those significant changes introduce much greater flexibility and will enable many LEAs to turn existing local groups into statutory forums. We believe that those changes are a substantial and positive response to consultation and show that we have listened to the concerns expressed during the Bill's passage.
	We have also listened to what has been said about the functions of the schools forums. There was substantial agreement in the consultation responses that the functions that we envisaged for the forums—mainly consultative and advisory, as we have consistently emphasised—are on the right lines. This has confirmed our belief that the forums will provide a valuable resource for education authorities.
	The consultation exercise also showed considerable support for a limited decision-taking function, although we recognise that many have expressed a fear that this function would be expanded over time. That was never our intention, but nor was the decision-making function ever the main point of school forums, which are intended primarily to strengthen local partnerships. We have, therefore, considered the matter further, and, in consequence, we have tabled the amendments now before the House, following extensive discussions in the House of Lords. The amendments emphasise the advisory and consultative role of the schools forums, and restrict the role of the forums so that advice and consultation will be the limit of their function. The forums' advisory role is much the same as before, involving the funding formula for schools, service contracts, specific issues such as the balance of special educational needs spending, and arrangements for education otherwise. There will, however, be no power to take financial decisions.
	I have been passed a note giving me the answer to the question raised by the hon. Member for Isle of Wight. I am told that all LEAs were consulted, and about 90 responded. About 30 national organisations were consulted, 20 of which responded. The consultation was not sent specifically to schools. Perhaps my colleagues in the Department were worried about the bureaucracy that might be involved, and about the taunting that might come from Opposition Members about that. A summary of the consultation was placed on the Department for Education and Skills website.
	I hope that the House will join me in rejecting the Lords amendment and agreeing to the Government amendments, which preserve the most important aspects of schools forums while limiting their role to advising LEAs.

Graham Brady: I am pleased that the Government have taken some small steps to allay the fears that have been raised about the potential role of schools forums, although the Minister has not gone as far as we would wish. He spoke of the importance of collaboration and partnership between local education authorities and schools, but this is, in a sense, partnership by diktat. To move from a situation in which schools forums already operate perfectly successfully on a voluntary basis—as the Minister accepts—to one in which there is a statutory requirement to form and operate such forums, especially when there is a clearly recognised cost element to be borne, is to take a significant step.
	If the Minister's interpretation of the Government amendments is accurate, and the role of the forums is to be purely advisory and consultative, it is even more surprising that we should need a measure to require their establishment. As the Minister knows, that was one of the principal bones of contention in another place. Less than a month ago, on 19 June, during an exchange on this issue in another place, the Minister, Baroness Ashton commented:
	"As will become clear when we reach Clause 41, the schools forums are primarily advisory bodies."
	That led to a brief misunderstanding, in which some Members thought that she had said "purely advisory", and she was obliged to clarify her comment, saying:
	"My Lords, I am sorry; I said "primarily advisory" and not "purely advisory".—[Official Report, House of Lords, 19 June 2002; Vol. 636, c. 799.]
	The Minister's statement that the forums are now to be purely advisory bodies is, therefore, an interesting and useful development. It sits ill, however, with the statutory nature of the forums.
	The Minister's statement also sits ill with his remarks a few moments ago about the importance of deregulation, which he says that he accepts. This is clearly a regulatory measure that will increase the bureaucracy imposed on schools and local education authorities. It carries a cost, which is required by law, and according to statute will be placed squarely on the local education authority. The Minister prays in aid the consultation that ended in May. He says that the consultation largely supported the establishment of statutory schools forums in that there was support for consultation between LEAs and schools. It is easy for schools and LEAs to engage in such consultation at present, if there is support for it.
	It is not surprising that many Members in the other place and in this House fear that the Government have other intentions that perhaps go beyond the limited aims that the Minister has set out. He spoke about the context of these proposals in the light of the self-managing nature of our schools. He said that the role of the forums would be mainly consultative, and that although the consultation showed that there was support for a limited decision- making power, the Government's amendments do not proceed in that direction.
	The Government made some welcome concessions on Third Reading in the other place. They were prepared to set back the date of implementation of the schools forums provisions from 31 October to 15 January 2003. They allowed LEAs more discretion on how the schools forums should be constituted, and accepted that forums would have to include governors and head teachers, but the balance would be at the LEA's discretion and the method of election would be locally determined. The minimum size would be raised, but there would be no maximum. There would be a requirement to ensure exact proportionality between school phases. The Learning and Skills Council would have only observer status. The maximum percentage of non-schools members would be reduced from 25 to 20 per cent., and would include elected members of the LEA.
	Even with those changes and concessions in the other place, there is still a nub of concern about the nature of schools forums. The reassurances that were given on the size of the forums and the balance between the different phases of education implicitly accept that there is a danger that schools forums may in practice not represent the interests of all schools or all phases of education in an area. There may be some room for the balance to be tilted between different schools or phases of education.
	Many schools forums already operate successfully on a voluntary basis, and the Minister cited some of them. The Government say that their education policy is about shifting away from one-size-fits-all provision, so it is ironic that schools forums are moving in the other direction towards such a policy, with a new arrangement being imposed on schools and LEAs.
	We also concerned about the constitutional implications of this provision with regard to responsibility for LEA expenditure. There is a wider debate about the best mechanism for funding schools, how much money should go directly to schools, whether that should be done through a formula or in the spending review, as has been discussed once again today, or whether it should be done on a direct payment basis, which cannot be relied on in the long term. Although the Chancellor today spoke about a three-year period, that is hardly a hard and fast guarantee of a funding stream that can be relied on and that enables schools to plan accordingly.
	It is felt that bodies are being established which, even if they have no decision-making powers, will be there to advise Ministers on a massive power that they are taking to control local authority expenditure. Again, responsibility for the expenditure will rest with local education authorities, but control over it is being shifted—in the small matter of funding for the forums themselves, but more significantly in the context of the proposals to ring-fence schools budgets.
	By what mechanism, and in what circumstances, will funds be moved from one budget to another? How do Ministers intend to exercise their sweeping new power over local authority budgets? How will it be decided whether schools budgets are inadequate or sufficient? What procedures will be used to assess the recommendations and advice given by schools forums? They will be able to express concerns about the way in which money is disbursed, which will be passed to Ministers to interpret.
	The massive central power that Ministers are taking is a thread that runs through the Bill. The forums could almost be seen as a cloak beneath which Ministers can hide their actions.

Rob Marris: I understand the hon. Gentleman's concern about the balance of power between local education authorities and Government here in Westminster. Would he care to tell the House how he would organise that balance, and how his party would like it to be struck between the centralisation that he sees as a thread running through the Bill and powers for LEAs? I am thinking about what was said earlier about local democracy by the right hon. Member for Wokingham (Mr. Redwood).

Graham Brady: I should be delighted to do as the hon. Gentleman asks, but I fear that I cannot. He will probably not be surprised to learn that I feel very comfortable with the system of allowing schools the maximum resources, power, independence and freedom. I hope that, when we are in a position to consider the details of what we will say before the next general election, that view will feature strongly.
	It should be noted that the Government are themselves engaged in a profound redefinition of what LEAs should do. I am not necessarily suggesting that the Government are being sneaky in any way, or trying to hide their true motives. A genuine debate is probably taking place in Government about the exact role of LEAs.
	I was not taking a shorthand note, and I am sure that the Minister will forgive me if I misquote him slightly, but I think that when he appeared before the Select Committee recently, he made it very clear that LEAs should not be running schools—that their role should be strategic, and that they should take an overview. My hon. Friends and I feel comfortable with that. I suspect, however, that over the next couple of years the local education authority will become a very different animal from the one that we see today, or the one that we saw a year or two ago.
	There is certainly potential for movement in a certain direction. We heard today about direct payments to schools. We are trying to be consensual and non-partisan this evening, but we could comment that those payments may only just cover employers' national insurance contributions, and that they may be eaten up by the funding for Curriculum 2000, which never reached many schools. We should also bear in mind the shortage of funds currently experienced by many schools with sixth forms because of the Learning and Skills Council settlements. None the less, there is an increasing tendency towards direct payment in the form of a cheque submitted to the head, thereby bypassing the LEA. At the same time, through the Bill, the Government are assuming the power directly to squeeze the LEA side of the budget.
	We have various concerns, which in part relate to the point that was rightly raised about the exact role of LEAs and of individual schools, and about the extent to which we are moving in a particular direction. The Minister might want to add something to that debate. However, there is also the real constitutional concern about the divergence between where the responsibility lies for control and expenditure of public money through the local authority, and the increasing shift towards taking decisions about how that money is spent elsewhere—notably, by Ministers in the Department for Education and Skills.

Phil Willis: This was an important issue for Liberal Democrats in Committee—in the Commons and in the Lords—and it remains important as we consider the amendment before us. When the Minister introduced this group of amendments, he referred to those who support the recommendations of schools forums. The hon. Member for Isle of Wight (Mr. Turner) was right. I had intended to ask how many consultation documents were issued and how many replies were received. The Minister rightly pointed out that the organisations that were very supportive of schools forums—they supported them as described in the original Bill, not in its amended form—included the National Association of Head Teachers, the Secondary Heads Association and the National Association of Governors and Managers.
	If I were still a practising head, I would be somewhat attracted to the concept of schools forums. I was often at odds with my local authority about my school's budget share, and during area meetings, local primary heads were at odds with me about how much money they were getting in comparison with the secondary school. In turn, the local special school argued that the primary and secondary schools were getting a greater share. It was very difficult to decide which of them was being disadvantaged. Of course, that is one reason why we elect local authorities, and why members of all political persuasions—and independents—put themselves up for election. Taking such decisions is a fundamental role of local authorities. I might disagree with certain of their decisions from time to time, but it is important that this House preserve local government's right to take decisions on matters for which it has a distinct responsibility—a point to which I shall return in due course.
	The Minister mentioned Wales—an issue on which I, too, have been lobbied. The National Assembly for Wales's Green Paper, "The Learning Country", was a very good document. I urge the Minister to reconsider separating schools forums for Wales and for England, because under the legislation it is possible to do so.
	I am pleased to see that the Welsh Minister is in his place to answer these deep questions, if he is still a Minister in that Department—[Interruption.] There have been so many changes recently that I did not know whether he was just sidling on to the Front Bench for a chat. One of the advantages of having an elected Assembly for Wales is that it has every right to say what it would like for its schools. The Minister is at leave to exclude schools forums for England and have them only for Wales. If that is what the Welsh Assembly wants, the Liberal Democrats would accept that, as is only right and proper.
	I agree with the Minister and the hon. Member for Altrincham and Sale, West (Mr. Brady) about the need for better consultation with head teachers and governors about school budgets. That is said with due humility. The examples that the Minister gave of forums that have been organised by local authorities and their schools are shining examples of what can be done within existing regulations. We do not need a raft of new regulations and organisations to achieve what the Minister wants. We—and probably the Conservatives, too—would be happy to make it a duty on local authorities to consult head teachers and governors about school budgets and to publish the arrangements for so doing. That can be done within existing arrangements without all the paraphernalia of schools forums. That would protect the position of head teachers and governors.
	The schools forums proposed in the Bill now are very different from those originally intended by the Government. The original intention was for schools forums that would have considerable powers, if the Secretary of State decided to give them those powers. The forums would have had direct powers over local authority budgets and how they were devolved to schools. I am delighted that the Minister has agreed that those powers are not necessary. However, if the bodies will be merely consultative, why are we going to such great lengths?
	I also agree with the Government that schools should have a right to petition the Secretary of State if they feel that they are being disadvantaged. That is right. Head teachers and governors have a duty to ensure that the resources that they get meet their school's needs, especially now that they will be held more and more responsible for what happens.

Ivan Lewis: They will get more money.

Phil Willis: The Minister is so excited about the additional money. I am excited too, and I just wish that I was still leading my school as these resources were pouring in. However, I was in the House when the additional £19 billion was announced, but it turned out to be £6.1 billion.

Valerie Davey: Will the hon. Gentleman give way on that point?

Phil Willis: I am sorry, but I do not want to be distracted on to that issue. I am sure that the hon. Lady is far too wise to lead me astray.
	The hon. Member for Altrincham and Sale, West made a telling point. [Interruption.] It is always sad when Ministers cannot even be bothered to listen to the argument, because if they did they might be able to engage properly in the debate. The issue that the hon. Gentleman introduced was the new funding arrangements that are being proposed for schools and local authorities. If the budget for schools—the annual grant from the centre—is to be ring-fenced, with a separate budget for local authorities for running the LEAs, we will have a very different beast from the one that we have now. We have major reservations about the new arrangement, and it will call into question the enormous top-up that local authorities give to schools over and above the standard spending assessment that the Government say that they should spend on their schools.
	The Minister knows—he is a highly intelligent young man—[Interruption.] Oh, so he's 37. Wonderful! Heavens above! He knows that in the past financial year local government spent £370 million over and above Government grant on schools in local authorities. It was not heads or governors who raised that money. Those people did not go before the electorate to win seats to sit on the council and to make decisions to raise council tax accordingly.
	If we want to go down the road where everything is centrally controlled, where everything is decided in London and is simply imposed on schools and local authorities, I question whether local authorities have any future. On that basis, why do the Government not devolve all the money directly from the centre to each individual school? If that is what they want, let them say so. It seems that that is where we are going on this issue.
	The jibe "one size fits all" has been made at our comprehensive system. It is a jibe that the Prime Minister, the Secretary of State and other Cabinet members constantly make at the public sector. The hon. Member for Altrincham and Sale, West is right to say that before us is an example of one size fits all that is being foisted on local authorities and schools irrespective of whether they want it.
	Under the Learning and Skills Council arrangements and the Learning and Skills Act 2000, funding for 16 to 19-year-olds is now provided by the Learning and Skills Council—a wholly unelected quango. Yet there is no mention in the Bill, or in the 2000 Act, of the suggestion that there should be a schools forum for the Learning and Skills Council. It seems to me bizarre that a democratically elected body should have to have a schools forum to interject, but that a totally unelected quango can deal with £6 billion of taxpayers' money, without any say from elsewhere.

Graham Brady: Does the hon. Gentleman agree that it is even more important a point given that the clear logic of the Government's position is to shift to a 14-to-19 phase of education and that the logical concomitant of that might be that the funding stream will go in the same direction, in which case even less of the money would go through the local authority route?

Phil Willis: That is an area of genuine discussion with the Government and something that we need to have out with them. In an intervention during a recent debate, the Under-Secretary of State for Education and Skills, the hon. Member for Bury, South (Mr. Lewis), gave a definite no to the question. However, the issue remains on the table. I ask the Minister to explain why the Learning and Skills Council does not have to consult schools even though it is determining their budgets; nor, indeed, does it have to consult a further education college.

Rob Marris: Proposed section 47A(1) refers to a schools forum including other bodies if the authority—that is the local education authority—so determines. The words used are:
	"representing such bodies as the authority may from time to time in accordance with regulations determine."
	That means that there is an avenue available to address the real problem that the hon. Gentleman raises.

Phil Willis: I am glad that the hon. Gentleman raised that. If he reads the background notes, he will find that we are talking about a member of the Learning and Skills Council being allowed on the schools forum not as a voting member but as an observer. No doubt he or she will have nothing better to do than observe. I am making the point that the reverse does not apply. We have an unelected body that is responsible for £6 billion of taxpayers' money, to which none of the regulations that we are discussing apply. At the same time, we apparently have to have a new organisation for the local education authority. I want the Minister to reply to that issue.
	The final point that I want to raise is the question of non-school members. That is an important issue on which the Minister can provide clarification. What was the reasoning, for instance, behind the reduction in the House of Lords from 25 per cent. to 20 per cent? It would be useful to put on record that rationale. Will the Minister explain why head teachers and governors are important school members, but teachers and support staff are non-school members? I find that insulting to teachers and non-teachers, who somehow do not even qualify, for the sake of the school forums, to be recognised as part of the school community. If a formula can be devised for the proportion of head teachers or governors on the school forum, surely the same courtesy can be extended to the very people who have an important interest in their schools—the teachers and support staff.
	In an earlier debate, the hon. Member for Ipswich (Mr. Mole), who has left his place, raised the issue of the burdens on governors. Most governors apply to join a governing body or—shall we say—are encouraged to do so because they want to become involved with that particular school. That is their real interest. When they get there, they find that they have all sorts of other duties as well. Representing other schools is difficult both for individual governors and for individual head teachers. Head teachers, by definition, as chairmen of governors, have a real interest in their own school and community and have a duty to fight for the best interests of their school and their school community. It is difficult for them to make objective decisions about budgets et al, across a whole authority, without having all the other information. If we want governors to play a key role, as the schools forum legislation clearly envisages, we are putting yet another huge burden on school governors.
	At the end of the day, this is an issue of local democracy. As a party, we are fundamentally supportive of the whole principle of local democracy and local decision making. We believe that the balance is just about right between increased autonomy and increased ability to innovate for schools, and local authorities that have become light-touch authorities. They are absolutely essential, however, in terms of making sure that all the machinery fits together. They have key roles to play. All we are saying to the Government is this: why invent a whole area of bureaucracy that is totally unnecessary, when, by simple regulation, using existing provisions, the Minister can have exactly what he wants—advisory bodies including governors and head teachers?

Andrew Turner: The reason why I asked the Minister how many people had responded to the consultation was that the Government's consultation record on the Bill, and on a whole range of issues related to it, is excellent, but that the response has been tiny. The Minister kindly gave me the figures. Of the 200 or so responses to the consultation, 90 were from LEAs and 20 from other bodies. I therefore assume that about 110, being from neither LEAs nor other bodies, were from schools. Those 110, of course, represent 110 of 25,000. A provision that was designed originally to give schools a key role in determining their budgets was, therefore, sufficiently popular for only 110 of those schools to respond to the Government, let alone say yes—the Minister did not tell me how many said yes.
	Rather like the hon. Member for Harrogate and Knaresborough (Mr. Willis) and my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady), I find it hard to understand what the clause's purpose is any more. I understood what its purpose was when the Bill left this House for the other place. The Government were then determined that schools should get it right when LEAs got it wrong, and that schools should be given the opportunity to get it wrong even if LEAs had got it right. The Government do not trust LEAs, and it does not matter what kind of LEAs they are. I am not a great fan of LEAs, but even the budgets for grant-maintained schools were set according to the formula—admittedly with knobs on—determined by LEAs.
	When the Bill left this place, the clause enabled LEAs to be overtaken by schools in determining school budgets. As far as I can see from reading the proposed new section 45A in clause 39, schools could determine the size of the school budget as well as how it should be disposed. Schools could decide that money should be spent on schools rather than on old people's homes, transport or roads. That was the Government's absurd purpose, and their lordships rumbled it and got rid of clause 41.
	The Government accepted the need to remove the worst bits of clause 41—the power of schools to override LEAs, which, for all their faults, are democratically elected—yet they still think it necessary to keep the rest of the absurd framework. They want to put into statute something that many LEAs do already and that many groups of schools could do even if their LEAs did not want them to. It is not unknown for head teachers and governors to meet outside the arrangement made by an LEA.
	It is extraordinary that the Government think that the only things that happen are provided for by legislation or regulation. The Minister shakes his head, and I do not blame him. He is on the new side of the Labour party that does not believe that, but I regret to say that this clause confirms my belief that the Minister shares the Government's outlook that the only things that happen are determined by regulation and legislation. That is not the case, so there is no need for the statutory framework. Unlike the Government, I do not disagree to the Lords amendment.

David Miliband: I begin with a matter of no significance. The Under-Secretary of State for Education and Skills, my hon. Friend the Member for Bury, South (Mr. Lewis), wants the hon. Member for Harrogate and Knaresborough (Mr. Willis) to know that, although my hon. Friend may look like a year 12 in a suit, he is actually only a year 6. He is at least two years younger than me, so he does not want any aspersions cast in his direction. He is very much young Labour, and is coming up sharply alongside us.
	I shall deal with three points in my response to this interesting debate: the purpose of the changes, the role of LEAs and the nature of the proposals. It is important to recognise that LEAs are already required to consult on the funding formula and on the scheme in the financial control document that they issue. The quality of the consultation that takes place as a result of the encouragement that is given to LEAs to form the partnership with schools that we want should be honoured in the breach as well as in the observance.
	The amendment tries to remedy the problem that, in some LEAs, schools feel that they have insufficient chance to have a proper dialogue with the LEA about the organisation of a school's budget. The forums have received much support from organisations representing head teachers and schools. Notwithstanding what the hon. Member for Isle of Wight (Mr. Turner) said about the consultation, I was impressed by the seriousness of purpose demonstrated by the respondents. We are trying to solve the problem that some schools feel disempowered when the LEA formulates its plans.
	On the role of the LEA, the Conservative party cannot decide whether it loves LEAs or loathes them. In the course of a single day, the hon. Member for Isle of Wight has gone from loving them to loathing them and back again. The right hon. Member for Wokingham (Mr. Redwood) made a passionate plea to get rid of them completely. The Government believe that LEAs have an important role, but it is not one of running schools. Their role is to support schools in school improvement, to provide the services that cannot be provided by schools alone and to support the drive to rise standards.
	I must tell the Liberal Democrats that the role that the Government have set for LEAs is standing the test of time. It is a proper role that is designed to enhance what schools do, not to replace it.

John Redwood: The Minister misrepresents my view. I said nothing about the abolition of LEAs. However, how much will the forums cost? Why can he not find a better way to take account of the views of schools without creating more expensive bureaucracy?

David Miliband: I am sorry if I misrepresented the right hon. Gentleman's views. They seemed clear to me, but I am happy to hear that he, too, loves LEAs.
	Costs depend on how LEAs decide to develop the forums, which are the mechanisms for consultation. LEAs that already have meetings with head teachers and others can simply extend those to include the forum. We have designed clause 41 to encourage LEAs to exercise maximum flexibility on how they undertake their responsibilities.
	The hon. Member for Harrogate and Knaresborough asked who should be represented on the forums. That is a matter for local authorities. We are not trying to create a schools parliament and I would hesitate before inviting a cavalcade of people to come along to the meetings. However, if LEAs think that members of the local schooling community have important points to make, they can invite them to the forums. Heads and governors are referred to as key players because they control school budgets, and it is the purpose of the forums to discuss school budgets.
	The hon. Gentleman mentioned the role of the learning and skills councils. It is significant that the Chancellor mentioned in his statement today the need to develop serious relationships at a local level between LSCs and the bodies with which they work. Part of that could involve discussing how the serious dialogue at LEA-school level can be extended to the LSC. The impression from my local experience is that in its first 18 months of operation, the LSC has made serious efforts to be a genuinely open and consultative body, although I take the hon. Gentleman's point that it is not democratically elected.
	The Government amendments need to be set in the context of the arrangements that we are introducing to separate the budgets of schools and LEAs. Although LEAs will retain ultimate responsibility, it is time to give schools a sense of collective responsibility, in their partnership with an LEA, for the way in which their budgets are managed. What is the best way to dispose of resources? How are different priorities to be addressed and met? Is it better to spend money at school or LEA level to do best by pupils? Schools have an opinion on those questions and it should be heard clearly in LEAs.
	We should not replace the mechanisms that work well, but we should put in place mechanisms if they are missing. The Lords amendment shows a distrust of schools, which is wrong. I hope that the House will vote against it and instead favour the Government amendments.

Question put, That this House disagrees with the Lords in the said amendment:—
	The House divided: Ayes 315, Noes 169.

Question accordingly agreed to.
	Government amendments (b),(c) and (a) to the words so restored to the Bill, agreed to.

After Clause 62
	 — 
	Academies

Lords amendment: No. 37.

David Miliband: I beg to move, That this House agrees with the Lords in the said amendment.

Madam Deputy Speaker: With this we may discuss Lords amendments Nos 35 and 36.

David Miliband: Lords amendment No. 37 gives effect to our intention to require academies, formerly known as city academies, to take part in statutory admission forums and have regard to their advice—an obligation that we have included in their funding agreements. We have already put in place robust arrangements to ensure that academies will be inclusive schools, and that they will agree their admission arrangements in partnership with local education authorities and other admissions authorities.
	I shall spell out those arrangements for the benefit of the House. Academies are an integral part of the Government's wider programme to raise standards for all and transform secondary education, and are a new and distinctive kind of school. We are confident that they will offer great opportunities to pupils from some of the most disadvantaged communities in England. As independent schools, academies will have certain freedoms and will be different in certain ways from other maintained schools. We have ensured that they have the flexibility and the freedom that they need to respond to the demands and challenges that they will face. At the same time, we have made sure that, on certain key and fundamental points, they comply with requirements on maintained schools, most notably in relation to admissions.
	First, on differences in freedom, academies will have the freedom to offer staff terms and conditions outside the teachers' pay and conditions document, and significant freedom to tailor the curriculum, its development and delivery to meet pupils' needs. There is also great flexibility in the make-up of the governing body of each academy.
	Academies are part of the local schooling system, not separate from it, however. Let me explain. They must comply with admissions procedures and requirements as they apply to maintained schools. Their arrangements must be fair, transparent and objective. They have no more ability to select than do maintained schools. They must have independent panels to consider appeals against non-admission, in the same way as maintained schools. If they band by ability, those admitted must reflect the ability of those who apply.
	We want to make sure that academies' involvement in their local admissions networks is transparent and strengthened. That is why we have tabled the amendment. I have already said that academies will be required by their funding arrangements to participate in forums. However, the amendment will put a statutory duty on admissions forums to promulgate their advice to academies as well as maintained schools within the forum's area. It will also put a statutory duty on the governing body of an academy to have regard to such advice, which will be in addition to its contractual duty to have such regard through its funding agreement.
	Mandatory admissions forums will enable us further to improve the admissions process for parents and pupils. They will consider how well local admissions arrangements are working and they will broker agreements on difficult local issues, such as arrangements relating to challenging and vulnerable children. Well run admissions forums already consider such issues.
	A typical forum—for example, the one operating in west Sussex—meets three times a year. At its first meeting of the year, the west Sussex forum considers information to parents, assessing how user-friendly and helpful admissions prospectuses and forms are to local parents. The later meetings review the admissions round, considering what went well and where there are problems to be resolved. From that, the forum might make recommendations for improving the process. In the course of looking at those issues, the forum might identify other issues that it will also address—for example, issues relating to applications outside the admissions round or to applications from neighbouring authorities.
	It has always been our intention that academies should have regard to the advice of local admissions forums. The amendment simply makes that position clear and unmistakable. It is important to understand that this is not an impediment to the success of the academies programme. In fact, the academies programme is proving extremely popular with sponsors, LEAs and local communities. In all cases, all parties have agreed that the academy should be a member of the admissions forum and should have regard to its advice.
	We have recently awarded development funding to a further five partnerships of LEAs and sponsors working to establish academies to serve their areas. Those new partnerships are in Bradford, Leeds, Liverpool, Northampton and Sandwell. Letters have been sent to the hon. Members for the constituencies concerned.
	I draw attention, by way of example, to one of those projects, not because it is more important than others, but because it illustrates an important point. The Sandwell academy is the second to be sponsored by the Mercers Company and Thomas Telford online, joining the existing project in Walsall; so one of the CTCs is sponsoring not one, but two academies. Those sponsors understand and accept entirely that academies are different from CTCs. They are perfectly happy with the position. Sir Kevin Satchwell, head of Thomas Telford school, is the project manager for the new academies sponsored by the Mercers and by Thomas Telford. He has said that he is happy for the academies to be part of the admissions forum. Thus there are CTCs that wish to take advantage of the provisions in the Bill to convert into an academy.

John Redwood: Does the Minister think that grammar schools are a good thing or not?

David Miliband: As the right hon. Gentleman knows, we have always opposed the 11-plus. I am proud that I went to a comprehensive school. We should be proud of the success in doubling GCSE achievement at age 15 over the past 30 years. The Government are seeking to build on what comprehensive schools have achieved, not turn the clock back.
	I was speaking about the wish of some CTCs to convert to academies. Djanogly CTC in Nottingham, for example, is making excellent progress with its plans to become an academy. At the same time, the new academy will replace the existing Forest school in Nottingham. I hope that these examples give some flavour of the popularity of the programme as it is, not as Opposition Members might wish it to be. I commend the amendments to the House.

Graham Brady: At the outset of this brief exchange, perhaps I should respond in kind and say that I am proud to have been educated at a grammar school. Even though the Minister was not prepared to pay tribute to the excellent work done in our remaining grammar schools throughout the country, I certainly will. They are a vital part of the fabric of education in our country. It is instructive that the Minister was prepared to congratulate comprehensive schools, even though some of his colleagues believe that they have failed over the past 20 or 30 years, but he was not prepared similarly to congratulate excellent schools that happen to be selective in intake.
	The Government are clearly somewhat confused in that regard. In the past few days, the Prime Minister, in comments quoted in the Daily Mail of 13 July, said that it was the "core mission" of the Government's three-year spending plan being unveiled today to spell the end of what he described as the
	"one-size-fits-all comprehensive".
	It appears that the Minister is perhaps the last defender of the one-size-fits-all comprehensive. Perhaps, since he has not been so close to the Prime Minister, they have been starting to diverge in policy. We also heard on 30 June that the Secretary of State had referred, in relation to Labour's mission to consign the bog-standard comprehensive—a phrase used by Mr. Alastair Campbell, not the right hon. Lady—to history, to getting rid of a
	"one-size-fits-all culture"
	of failing schools and schools that she would not touch "with a barge pole".

John Redwood: Does my hon. Friend agree that it is a lamentable failure on the part of Ministers not to answer a reasonable question and name the schools that they do not think that people should touch with a barge pole?

Graham Brady: My right hon. Friend makes an important point. We are waiting to hear a response from Ministers. I am sure that, in due course, they will supply a list in response to the questions tabled by my hon. Friend the Member for Ashford (Mr. Green).
	This is a classic case of our trying to help the Government to achieve what they say they want to do. They say that they believe in a more diverse schools sector, more autonomy for schools and less bureaucracy and red tape, but they are imposing a new statutory arrangement on all schools: the statutory admissions forum. In another place, my noble Friend Lady Blatch tried to amend the Bill to remove the whole paraphernalia of the admissions forums. She said:
	"If admission forums are thought to be a good idea by schools in an area and a majority of schools deem that there should be a forum, they should determine whether to have one."—[Official Report, House of Lords, 3 July 2002; Vol. 637, c. 292.]
	That is a very clear and permissive approach, which does not burden schools with unnecessary regulation and red tape. The Government are now placing a new statutory duty on schools, however, which gives the lie to everything that they say about believing in diversity, using a light touch and allowing maximum autonomy to schools.
	Will the Minister explain exactly what the new legislative requirement will mean in practice? What does the new duty to "have regard" to the forums mean? Is it a duty to follow the instructions of the forum, or merely a fig leaf to allow Ministers to claim that city academies are covered, or a meaningful legal requirement? The Minister said that academies must be inclusive and that they are already required to be so. Indeed, in his opening remarks, he implied that the change was not necessary, before going on to advise the House to accept it. Is not the whole arrangement meaningless anyway, because the sweeping powers taken in part 1 give Ministers power to make exemptions from that legal requirement? Once again, even though city academies will be required to have regard to the views and advice of the admissions forum, that very requirement could be removed. The Minister is legislating to give himself power to remove the very restriction that he is trying to put in place.
	The provision is a needless constraint on academies. The Opposition believe in city academies. We believe that they are an exciting opportunity and that they can be a new type of school that will free up innovation and autonomy in schools, provide a new direction, and act as a model that can be followed by other schools throughout the country. However, Ministers who claim to believe in the model of city academies and in freedom and autonomy for schools are contradicting everything they say that they believe by trying to restrict that freedom; they are obstructing schools that could go on to be beacons of excellence in our cities by trying to restrict them in a needless and counterproductive way.
	We strongly urge the House to ensure that city academies are given the true freedom and autonomy that they need to go off and flourish in a thousand different ways that Ministers cannot even imagine. If Ministers really believe in autonomy for schools, this is the opportunity for them to prove it and to show that they are prepared to trust schools and give them the freedom to allow them to go out and succeed in our cities.

Phil Willis: The hon. Gentleman protests too much. It is sad that people on the two Opposition Benches are finishing the evening on a discordant note. This is a key issue. We were delighted that Baroness Sharp was able to get the support of Baroness Ashton in getting the amendment through in another place, and I hope that it will be supported tonight.
	The hon. Member for Altrincham and Sale, West (Mr. Brady) mixes up two matters. This is not about the future of academies, but about the future of who can go to those academies. The one thing that guarantees children of all backgrounds, creeds and colours fair access to our schools is a fair admissions policy. That is all we are trying to do, and that is why we support the Government. It may be true that CTCs flourished and were successful, and I do not want to decry their success at all. However, the reality is that Dixons city technology college in Bradford, which is a very successful school, has an arrangement for admitting children that differs from all the other schools in Bradford, and it therefore takes its pick before everybody else. Although it may have a fair and even distribution of students, that skews the whole process. If we are to have voluntary aided schools, more faith schools able to select their own admissions policies, and CTCs and academies with their own admissions policies—all with a different timetable—what is ultimately left for youngsters who had no one to advocate their case? I am delighted that an admissions forum is considering the admissions to all schools at the same time.

John Redwood: Will the hon. Gentleman give way?

Phil Willis: No, I want to finish in the remaining three minutes. Most heads and governors are happy to engage in that process.

John Redwood: rose—

Phil Willis: All right—how can I resist?

John Redwood: Does the hon. Gentleman think that we should be able to select people who are better at, say, soccer or ballet to go to schools that specialise in those areas, or does he think that anyone should be able to go to those schools?

Phil Willis: With respect, I do not want to re-run the School Standards and Framework Act 1998 argument. I agree that the process of selecting by aptitude is nonsense. Indeed, the right hon. Member for Charnwood (Mr. Dorrell) made that point at the time. How do children at that stage display an aptitude, rather than an ability, in something? However, I do not want to go down that road. This is about fairness in the admissions system, and I hope that the Government will continue to support the amendment.

David Miliband: It is revealing that in 10 minutes we can expose the fact that fair admissions is controversial even for the modern Conservative party. We are discussing the simple principle that we should have inclusive schooling in our communities and that the new city academies should take pupils from a wide range of abilities. Labour Members are happy to stand behind that principle.

Graham Brady: One size fits all.

David Miliband: City academies are an innovation in our schooling system, and I am pleased to say that they will admit pupils from a wide range of abilities. He may be obsessed with the future of 164 grammar schools, but we are not. We are obsessed with the future of 3,500 secondary schools, which are the heart of secondary education. Today we heard from the Chancellor about the investment that will go into our schools over the next three years. We have heard about investment that Conservative Members oppose.
	Tomorrow, the hon. Member for Altrincham and Sale, West will hear about reforms to our secondary education system to improve teaching, the quality of leadership and school structures, and to establish the partnerships with local communities that will ensure that teachers and head teachers are not on their own in raising standards but are supported by the wider community, including parents, businesses and universities. I commend that vision of secondary education to the House.

It being Ten o'clock, Madam Deputy Speaker, put the Question already proposed from the Chair, pursuant to Order [this day].
	The House divided: Ayes 354, Noes 132.

Question accordingly agreed to.
	Lords amendment No. 37 agreed to.
	It being after Ten o'clock, Mr. Deputy Speaker put the remaining Questions required to be put at that hour, pursuant to Order [this day].
	Remaining Lords amendments agreed to.

BUSINESS OF THE HOUSE

Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
	That at this day's sitting, the European Parliamentary Elections Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Kemp.]
	Question agreed to.

EUROPEAN PARLIAMENTARY ELECTIONS BILL [LORDS]

Order for Second Reading read.
	Motion made, and Question put forthwith, pursuant to Standing Order No. 90(6) (Second reading committees), That the Bill be now read a Second time.
	Question agreed to.
	Bill accordingly read a Second time.
	Motion made, and Question put forthwith, pursuant to Standing Order No. 58 (Consolidation Bills),
	That the Bill be not committed—[Mr. Kemp.]
	Question agreed to.
	Read the Third time, and passed, without amendment.

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),

Working Conditions for Temporary Workers

That this House takes note of European Union Document No. 7430/02, draft Directive of the European Parliament and of the Council on working conditions for temporary workers; and supports the Government's initial approach to negotiations.—[Mr. Kemp.]
	Question agreed to.

DELEGATED LEGISLATION

Mr. Deputy Speaker: With permission, I shall put together the motions relating to delegated legislation.
	Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Companies

That the draft Directors' Remuneration Report Regulations 2002, which were laid before this House on 1st July, be approved.

Local Government Finance

That the Local Government Finance (England) Special Grant Report (No. 102) (HC 943), on Children's Services (Quality Protects) Special Grants for 2001–02 and 2002–03, which was laid before this House on 19th June, be approved.
	That the Local Government Finance (England) Special Grant Report (No. 104) (HC 1005) on Children's Services Quality Protects Adoption and Permanence Taskforce Special Grant for 2002–03, which was laid before this House on 26th June, be approved.

Overseas Development

That the draft Caribbean Development Bank (Further Payments) Order 2002, which was laid before this House on 27th June, be approved.
	That the draft African Development Fund (Additional Subscriptions) Order 2002, which was laid before this House on 27th June, be approved.

Representation of the People

That the draft Representation of the People (Scotland) (Amendment) Regulations 2002, which were laid before this House on 26th June, be approved.
	That the draft Representation of the People (England and Wales) (Amendment) Regulations 2002, which were laid before this House on 27th June, be approved.—[Mr. Kemp.]
	Question agreed to.

BUSINESS OF THE HOUSE

Ordered,
	That, at the sitting on Tuesday 23rd July, the Speaker shall not adjourn the House until any messages from the Lords shall have been received.—[Mr. Kemp.]

SITTINGS OF THE HOUSE

Ordered,
	That the House shall not sit on Friday 18th October or any later Friday until the end of the present Session of Parliament; and the provisions of paragraphs (3) and (4) of Standing Order No. 12 (House not to sit on certain Fridays) shall apply to those days.—[Mr. Kemp.]

PETITIONS
	 — 
	Pen Ponds Car Park

Christopher Chope: I wish to present the first of two petitions condemning the Royal Parks Agency's plan to close Pen Ponds car park in Richmond park, which has facilitated popular access to the park for more than 70 years. The hon. Member for Richmond Park (Dr. Tonge) is also presenting a petition, with signatures largely from her constituents.
	This petition has been signed by many hundreds of people living outside the Richmond Park constituency, in areas including Putney and Roehampton, Kingston, Battersea, Tooting, Twickenham, Sutton, Cheltenham, West Sussex, Guildford, Portsmouth and indeed Christchurch. That shows that this is not just a local but, more important, a national issue.
	To lie upon the Table.

Belgrave Avenue Surgery

Andrew Rosindell: I wish to present a petition on behalf of the residents of the Gidea park community in my constituency, where it is proposed to close the doctor's surgery in Belgrave avenue. The petition reads:
	The Petition of residents of the Gidea Park area, Romford.
	Declares that the Belgrave Avenue Surgery in Romford is an essential part of the local community, and that they are opposed to the proposed closure.
	The petitioners therefore request that the House of Commons urge the Secretary of State for Health to take all appropriate measures to ensure that the surgery is permitted to remain open and serve the residents of Gidea Park.
	To lie upon the Table.

Pen Ponds Car Park

Jenny Tonge: The petition from my constituents and those of the hon. Member for Putney (Mr. Colman), and national users of Richmond park, has attracted 16,500 signatures. It declares that
	the Royal Parks Agency's plan to close Pen Ponds Car Park, the sole car park inside the perimeter road, removes the only safe and reasonable access to the heart of the park, and so to beautiful Pen Ponds for the most vulnerable groups, young families and the elderly alike . . . the Petitioners request the House of Commons to urge the Royal Parks Agency to reconsider the planned closure of Pen Ponds Car Park.
	To lie upon the Table.

NORTH-EAST MUSEUMS

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kemp.]

Kevan Jones: May I begin by saying how pleased I am to have secured tonight's debate? It allows me not only to highlight the excellent work of museums in the north-east, but to emphasise the fact that not all of our national treasures are located in London. A truly national policy on museums and galleries must recognise the immense value of regional museums and the contribution that they make to our country's historical and cultural life.
	The north-east has a long, diverse and proud historical past—from the Roman settlement, through the early examples of Anglo-Saxon Christianity, to the 18th and 19th centuries, when industry in the north-east played a key role in Britain's earning the title of the "workshop of the world". Much has been written about the decline of the north-east in the past 30 years, and it is true that it has been through hard times. However, a strong part of the region's character is its proud sense of history, along with a willingness to change and to adapt to face future challenges.
	Such cherishing of the past but adapting for the future is exemplified in the work of the region's museums. They are varied in terms of both size and subjects covered, and they contribute to the region's tourism industry, which the Northumbria Tourist Board estimates is worth some £738 million to the north-east's economy. Last year, more than 3 million people visited museums in the north-east. They directly employ more than 600 people, along with countless seasonal workers and an army of unpaid volunteers, who give of their time freely to help their local museum. Those individuals in particular should be thanked, and their hard work on behalf of museums not just in the north-east, but nationwide, should be recognised.
	One strand of the north-east's rich web of museums is Beamish, the North of England Open Air Museum, which is in my constituency. A living and working museum that was created in the past 30 years, Beamish covers some 300 acres of a greenfield site, and depicts life in the north-east in the 1800s and 1900s. Last year, it attracted more than 320,000 visitors, 50,000 of whom were children. Children are allowed to wander freely across the site. They can walk down a 19th-century street, complete with trams, travel on a steam locomotive, or visit a coal mine to experience some of the harsher conditions of Victorian life.
	What we see today is testimony to the foresight of Beamish's early advocates and the key role played by local authorities in its development. Such organisations worked together by pooling resources and, in doing so, they recognised that Beamish has a regional significance outside their own municipal boundaries. For that, they should be congratulated.

Joyce Quin: My hon. Friend mentions the partnership work of local authorities in promoting the cultural sector. Will he join me in congratulating Gateshead and Sunderland councils on achieving beacon status through their work in the cultural sector to promote regeneration? The cultural sector is clearly a key area of our economy, and local authorities' work in promoting it is to be applauded.

Kevan Jones: I am grateful to my right hon. Friend for that intervention, and I add my congratulations to those councils. They are just two examples among many throughout the north-east of councils working not only with each other, but with the private and voluntary sectors. I also agree about the cultural sector's importance to the economy of the north-east—a point to which I shall return.
	I wish to pay tribute to an individual from local government and his contribution to Beamish. John Mawston was a councillor for 48 years in the constituency of my hon. Friend the Member for Houghton and Washington, East (Mr. Kemp). My hon. Friend is in his place, and although he is unable to speak as his role as a Whip debars him from doing so, I know that he would endorse my comments. For the past 10 years until his retirement earlier this year, John Mawston was chairman of the Beamish joint museums committee. His dedication and commitment to, and enthusiasm for, Beamish were known throughout the region. We are all grateful for the tremendous hard work that he put in over many years to make Beamish the success that it is today. I wish him all the best in his retirement and trust that he will receive the recognition that his efforts deserve.
	Beamish is an asset to the region, and we can be proud of it, not because it preserves the region's heritage in glass cases but because it allows young and old alike to experience living history, whether through riding on a steam locomotive from the 1800s or visiting the Co-operative store on the museum's main street. Education is also a key theme at Beamish, alongside research. I congratulate the museum on the work that it does with local schools throughout the region, which is vital if we are to make history relevant to a new generation.
	Beamish is one of the larger museums in the region, but in demonstrating the variety of museums we have it would be remiss of me not to mention one of our smaller museums—it happens to be in my constituency—which is the Anker's House museum in Chester-le-Street. It is next to the parish church of St. Mary's and St. Cuthbert's and it tells the history of the founding of the church in 883 to house the body of St. Cuthbert. It also explores the early history of Christianity in the region.
	The museum also tells the story of the ankers or anchorites who inhabited the site during the middle ages. Men and women were interned in small rooms with only a small window or squint through which to view the outside world. They led a life dedicated to prayer and contemplation, and their material needs were passed through a small hatch. For many, their ultimate resting place was their small room, the squint simply being sealed upon their death. That is a truly remarkable example of dedication to duty, and a practice that I know any Government Whip would envy as a way of controlling the more unruly among their flock.
	I mentioned earlier the region's willingness to change and adapt, and another characteristic of the region is its willingness to co-operate across sectors to promote the region. That can be seen by the co-operation between museums in the region, and also in local authorities' response to the report "Renaissance in the Regions". The proposed regional hub, bringing the Tyne and Wear museums service, Beamish, the Bowes museum—in the constituency of my right hon. Friend the Member for Bishop Auckland (Mr. Foster)—and partner museums in Teesside into a strategic alliance, will help to promote and be a focal point for excellence in the region. It is a clear demonstration of what can be achieved when organisations think and work on a regional strategic level.
	The hub is not about regional control of local museums; it is about co-operation in delivering local services and also ensuring that the museum service in the region secures the financial investment that the museums need and deserve. The north-east is well placed to show leadership in the museum sector by demonstrating what can be achieved by regional co-operation and cross-authority working. The business plan and the 10-year strategic plan being drawn up by the hub will draw on the service's existing strengths and also demonstrate how funding can enhance and promote museums across the region.
	The north-east has changed a great deal over the past 20 years, and I have already highlighted the importance of the museum sector to the region's tourism economy. It is not just about preserving the past; it is about using our historical and cultural assets to promote and regenerate the region's future.
	Last weekend saw the opening of the Baltic centre for contemporary arts in Gateshead, demonstrating not only the new vibrant face of the north-east but how culture can be a driving force in the regeneration of the region.
	The region's museums and cultural heritage, whether it be the industrial and social heritage at Beamish and the Discovery museum in Newcastle, or the fine works of art at Bowes and the regional art galleries, make up a region with a rich cultural and historical tapestry. Newcastle and Gateshead are competing for the title of European city of culture in 2008. Although promoted by Newcastle and Gateshead, the bid is regional, and the museums throughout the region are an important part of it.
	The cultural sector in the region is about demonstrating a richness, diversity and quality of world-class status. That is amply demonstrated in the region's museums. The concentration is on access for all and education for all. We are proud of the region's history and in demonstrating how it can be a central and important part of the renaissance of the north-east and its people.
	I trust that my speech has highlighted the importance of museums to the north-east, not only in preserving the past but adding to the economic and cultural life of the region's future. I understand that the Department for Culture, Media and Sport has in principle agreed to fund regional hubs. I stress to my right hon. Friend the Minister that museums in the north-east are ready to meet the challenges that the Government have set out and to act as a beacon for how museum services should be provided.

Derek Foster: I am grateful to you, Mr. Deputy Speaker, and to my hon. Friend the Member for North Durham (Mr. Jones) for the opportunity to take part in this brief debate. I congratulate my hon. Friend on seeking and securing the debate and on the powerful case that he has made for renaissance and for the funding of the hub structure within the region.
	I think that it was Agatha Christie who said that it was wonderful having an archaeologist as a husband because the older she became the more interest he took in her. I feel a bit like that: the older I become, the more interested I become in museums. Perhaps that is because one day I might become a minor exhibit in one of them.
	Beamish is wonderful. It celebrates everything that I love about the northern region, and certainly its recent industrial and social history. It does so in the most creative and educative way. I am immensely proud of what was achieved by Tyne and Wear and Durham county councils. It is now funded entirely by the county councils, and has been over many years.
	The Bowes museum is in my constituency. It was founded by John Bowes, the Liberal Member for Barnard Castle, who was an ancestor of the Queen Mother, well over 100 years ago. He married a French woman and they collected many antiquities. They brought them over to this country and built what was almost a wonderful French chateau in the middle of some of the most beautiful English countryside. It is in a sense something of an anomaly, but it houses the most wonderful national collection—it has Canalletos, Rubens and Sèvres pottery. It is crucial to the rural recovery of Teesdale. It is crucial also to the market town initiative in which Barnard Castle is a participant. In addition, it is crucial to the development of tourism within Teesdale. I am delighted to hear that my right hon. Friend the Chancellor of Exchequer has provided some extra funding, which will go towards funding the hub structure of which Bowes is a participant.
	Let me mention in the second that remains that the Timothy Hackworth museum in Shildon is shortly to be transformed into a satellite of the national rail museum in York and is expected to attract some 35,000 plus visitors.
	I am delighted to see my right hon. Friend the Minister in his place, and we look forward to his response to this short debate.

Richard Caborn: I congratulate my hon. Friend the Member for North Durham (Mr. Jones) on giving me the opportunity to respond on what are important topics, especially for the north-east. I must mention one or two of the headlines that I saw in the press the other day. One was, "A picture of bold urban renaissance in the regions, led by art". The other, to which my hon. Friend referred at the start of his contribution, included the words, "challenge to London's grip on galleries", which, I think, appeared in The Independent. Clearly, therefore, even the national press are taking notice of what my hon. Friend and the other Members representing the north-east are saying.
	I am sure that most if not all Members have heard about, if not visited, the cultural delights of the north-east, as I have done on a number of occasions. Indeed, my right hon. Friend the Secretary of State for Culture, Media and Sport, was in Newcastle on Tuesday last week, and she visited the Baltic centre for contemporary arts. She was extremely impressed by what she saw there. I want to acknowledge the splendid achievements of museums in the north-east, especially those of Tyne and Wear museums, which has a very important relationship with other museums in the area. The then director of Tyne and Wear museums was a member of the regional museums taskforce that produced what many people now say was a groundbreaking report, "Renaissance in the Regions". Clearly, therefore, the north-east had a major input into that report, to which I want to refer a little later.
	Across the country, museums such as the Beamish and the Bowes, to which my hon. Friend the Member for North Durham and my right hon. Friend the Member for Bishop Auckland (Mr. Foster) have referred, can be crucial to attracting visitors. Tourist destinations develop through the museums and associated works, and they are an essential part of the economy, especially the local economy. That is particularly true in areas such as the north-east, which are building on their heritage and industrial past to create new economic benefits.
	The quality of these museums does much to enhance Britain's reputation as a world-class tourist destination, attracting domestic and international visitors alike. My hon. Friend the Minister responsible for tourism is working with the north-east and other regions to make sure that we can capitalise much more systematically on the visitors coming to this country and going to other regions of the UK. The museums in the north-east that have been mentioned are very important in that.
	The Department for Culture, Media and Sport and local authorities are supporting museums in the north-east and providing them with funding of about £12 million per annum. We see that as an important investment, collectively, by local authorities and central Government. The achievements of and major developments in museums and galleries in the north-east are substantial. The region has three museum services holding collections designated in recognition of their national and international importance: the Beamish museum and the Bowes museum, which have been mentioned, and Tyne and Wear museums. In addition to local authority support, the Department gives an annual grant of about £1 million to Tyne and Wear museums, of which it is a joint sponsor.
	Over 10 years, Tyne and Wear has doubled the number of visits to its museums to its current level of around 1.5 million people, and has achieved a 20 to 52 per cent. increase in the proportion of visitors—this is very important—from lower income groups, achieving a very high level of satisfaction among local communities. That has been done through community outreach activities, but without weakening the museum service's traditional curatorial strengths. That is important. We have maintained standards while attracting many more people to museums. That is reflected across the whole country. Tyne and Wear's partnership working has been mentioned and it is often cited as a model for other regional hubs. The report "Renaissance in the Regions" used it as an example.
	The Beamish museum attracted 320,000 visitors last year, and about 70 per cent. of them were from outside the region. That underlines my hon. Friend's point that the museum makes a substantial contribution to the local economy. The development and preservation of the Beamish valley as a resource to the community and for environmental study demonstrates an ongoing commitment to the regeneration of that former coalfield area. Since the Government came to power in 1997, our investment in coalfield areas has not only been well received, but plays a major part in those economies.
	I wish to thank Councillor John Mawston who, like me, is a member of the Amalgamated Engineering and Electrical Union. I know that he is extremely proud of that fact. For 48 years, he has been on the council of the Beamish open air museum. He was chair for 10 years, and has remained there as a volunteer. That shows the real commitment that he has made. I thank him for all the work that he has done. In fact, I am grateful to all the volunteers who give their time free of charge to do something in which they believe. Without them, many activities could not continue.
	Some 73 museums in the north-east are members of the Resource registration scheme and they attract 3 million visitors a year. A third of those visits are by children. In recognition of the value of museums to children's education and, indeed, to people of all ages and backgrounds, the Department for Culture, Media and Sport set up in 1999 an education challenge fund, managed by Resource, with the aim of building educational capacity in small museums. As a result of the North-East Museums, Libraries and Archives Council's bid to Resource, £64,000 in grants was matched with other funding sources to benefit 38 museums across the north-east, including volunteer-run, military, local authority and university museums.
	Another important source of funding for the north-east region's museums has been the heritage lottery fund. In 1999–2000, the north-east's museums received heritage lottery fund awards totalling £7.6 million. Up to May 2002, the north-east received £91 million in such funding and, at 68 per cent., the north-east has the highest success rate of the English regions for heritage lottery fund applications.
	In 2000–01, a major collaboration for Northumberland resulted in the award of £10 million by the heritage lottery fund to build a new records office as part of a major development of the Woodhorn colliery museum complex, Ashington. This will be a world-class building, bringing together archival, library and museum collections currently spread across four locations.
	In welcoming the taskforce report "Renaissance in the Regions", my noble Friend the Minister for the Arts said at the Association of Independent Museums annual lecture in January this year that the regional museums taskforce had delivered an excellent diagnosis of the weaknesses of the sector and had set out an exciting vision of what could be achieved through concerted action to remove the barriers to progress. She endorsed, in principle, the key proposal for a new framework of hubs for regional museums and announced the timetable for the selection of regional hubs as part of the process of implementing the report's recommendations. The report said that the framework should be based on the principle of an integrated system. It identified leadership for the museum community in each region and defined roles for each element in the framework.
	The regional hubs will respond to new agendas that put people and communities first, and they will invest in excellence. They will achieve the highest standards in exhibition content and presentation, in learning, education and outreach services, in collection management and in other key museum activities. At the launch of the museums and galleries month at the end of April, my right hon. Friend the Secretary of State for Culture, Media and Sport commented that "Renaissance in the Regions" had received a positive response from the museum community. The report outlined clearly what regional museums can achieve in promoting education and learning, social inclusion and community empowerment, creativity, tourism and, importantly, regional economic development.
	Resource has received a bid from a consortium of museums from each English region to create a hub in the region. We will announce the hubs later in the summer. As we heard today, the spending review is good for museums. Decisions on the funding of individual hubs will be made towards the end of the year when the review has been considered by the Department. Once the hubs have been announced, they will be expected to submit a strategic plan to demonstrate how they will use the money to support museums and will have to propose ways in which governance can be modernised.
	During the transitional period, Resource will work closely with the hubs to support and monitor their progress. It has taken steps to implement the taskforce recommendations, and the last spending review increased Resource's grant-in-aid to support regional activity to £10 million per annum. Work is in progress to maintain the momentum initiated by the taskforce with a series of measures to put in place the first building blocks of the new framework.
	As I said, the report criticised the lack of cohesion in the sector and stressed the need to find more effective ways of working from which all museums can benefit, from the largest nationals to the more modest, but no less valuable, regional museums. One way to do that is by ensuring that a partnership works, and the strong partnership in the north-east was mentioned. That will allow skills and experience to be shared, which will add a great deal of value to the work of museums. There are many examples of such partnerships working across the nation, which is to be welcomed.
	Some of the measures to develop the hubs will be funded by the designation challenge fund which, as I said, will be announced very soon. In addition, Resource announced last week that £500,000 of funding will be administered by the new regional agencies, such as the North-East Museums, Libraries and Archives Council, for the development of all museums, not just those in the hubs. A new museum development fund will support initiatives such as the establishment of the post of museum development officer in the regions, whose task it will be to support groups of museums with common interests in improving the standards of what they deliver.
	The taskforce report reveals three major problems in the museum sector: a lack of capacity, a leadership vacuum and a fragmented infrastructure. To address the last point, greater cohesion and partnership working are needed. To meet the need for more cross-sector work, Resource has been involved in setting up a strategic regional agency for museums, libraries and archives in each of the English regions. Those new agencies are building on the work of the area museums councils, and will provide strategic leadership for the whole sector.
	That has already happened in the north-east with the creation of the first regional agency in England, the widely acclaimed North-East Museums, Libraries and Archives Council or NEMLAC. That supported the north-east museums' bid for heritage lottery funding, ensuring that the north-east had, as I said earlier, the highest success rate of all the English regions. To take account of the expanding role of the regional agencies, Resource has doubled their total budget from £4 million to £8 million. That will enable grants and other advisory services to museums in the English regions to be maintained.
	In conclusion, and following the outcome of the current spending review, which was announced in the House—
	The motion having been made after Ten o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
	Adjourned at ten minutes to Eleven o'clock.